Next year’s Black Friday deals are at stake in President Donald Trump’s trade war with China.
In fact, Americans starting their holiday shopping this week are likely to be picking up some items that are already subject to Trump’s tariffs.
Since the tariffs went into effect at the end of September, handbags, perfumes, wallets, hats and fur coats are among the 5,700 items from China that have been subject to a 10% tariff – along with gifts for the sports enthusiasts in your life, including ski mittens, bikes, baseball gloves and golf bags. Cashmere imported for sweaters doesn’t escape the tax either.
Fortunately for this year’s shoppers, prices likely won’t be going up yet. American importers pay the duty, and most items on the floor for Black Friday were already priced before the tariffs kicked in, said Rick Helfenbein, president of the American Apparel and Footwear Association.
“Shoppers may be pardoned this Thanksgiving season, but they’ll be paying more come spring,” he added.
Next year could be very different if Trump and Chinese President Xi Jinping fail to come to a trade agreement before the end of the year, when Trump says he’ll escalate the 10% tariffs to 25%.
“Once you get to that 25% mark, that’s when you’re going to see more price increases for the end consumer,” said Christopher Shaker, a consumer products analyst and partner at RSM, an audit, tax and consulting firm for middle market companies.
Big box retailers Walmart and Target have already warned that the tariffs could lead to higher prices.
Trump is scheduled to meet with Xi next week on the sidelines of the G20 summit in Argentina to discuss trade.
But an agreement is far from certain. Earlier this week, Chinese negotiators canceled preliminary meetings with their US counterparts ahead of the summit. On Tuesday, US Trade Representative Robert Lighthizer ramped up the pressure on China even further by releasing an updated report showing Beijing has done little to fix its unfair practices.
The Trump administration has also made it a priority to aggressively go after China for engaging in intellectual property theft and forced technology transfers. Before imposing the tariffs on $200 billion of goods in September, Trump put taxes on $50 billion of Chinese goods – but those earlier rounds did not include many consumer goods.
China has retaliated with tariffs on $110 billion in US products and is likely to respond with more if the United States goes ahead with the increase in January.
American businesses and lawmakers on both sides of the aisle agree the China trade issues should be addressed – but not everyone believes that tariffs are the right way. Some manufacturers and retailers say the duties could lead to job losses and higher prices for consumers.
Trump has also suggested he could move ahead with with imposing another round of tariffs on an additional $267 billion in goods if no agreement can be reached, effectively covering all Chinese exports to the United States.
The move would tax even more consumer goods that come from China, including televisions, Apple watches, Air Pods, and Fitbits.
So far, a relatively small amount of apparel goods from China have been hit with tariffs, but a new tranche would be significant. In total, the United States receives 41% of its apparel imports from China, 80% of accessories, and 73% of footwear, said Helfenbein.
“It’s almost like this year and next year are two different worlds,” he said.