Aug 2, 2019

For retailers, Trump's tariff announcement is personal

Photo: Andrew Spear/Getty Images

Retail company shares were among the hardest stocks hit on Thursday after Trump's tariff announcement.

Why it matters: While previous tariffs mainly targeted components of consumer goods, the new tariffs will apply largely to things people buy directly. That will raise the cost of everyday purchases and force retailers to either increase prices or eat the cost of the tariffs, putting pressure on their margins.

By the numbers:

  • Best Buy shares fell nearly 11%, Gap and Kohl's dropped by almost 8% and Nordstrom stock ended the day nearly 7% lower.
  • "The S&P Retail index fell 3.4% versus the 0.9% decline for the general S&P 500," wrote Maria Halkias of the Dallas Morning News.

What they're saying: "The list of products these tariffs will hit are almost entirely consumer oriented," said the Retail Industry Leaders Association in a statement. "This new 10% tariff on Chinese imports is a direct hit on consumer products and family budgets, plain and simple."

  • "The tariffs imposed over the past year haven’t worked, and there’s no evidence another tax increase on American businesses and consumers will yield new results," the National Retail Federation said in a statement.

What's next? A report from Citi released in May estimated additional tariffs on the list of $300 billion worth of Chinese goods would be much worse for consumers than previous tariffs.

  • Goods included will represent 67% of total imports of consumer goods from China — as well as 66% of vehicles, 19% of industrial supplies and 38% of capital goods.

What to watch: Economists tell Axios that Trump's tariff announcement looks more like an attempt to sway the Fed into interest rate cuts than anything else.

  • Based on his previous tariff threats against Mexico that were quickly backtracked, there's worry the president is using Twitter more to manipulate those he sees as adversaries than to alert policy.

Go deeper

Trump's new China tariffs could hit tech hard

Illustration: Aïda Amer/Axios

The tech industry was scrambling yesterday after President Trump announced plans to impose tariffs on the $300 billion worth of goods the U.S. imports from China annually that are not yet subject to such taxes.

Why it matters: Until now, the U.S. has tried to target the tariffs on items that consumers wouldn't feel as directly, but this new round would appear to hit all manner of everyday goods, including nearly all types of consumer electronics.

Go deeperArrowAug 2, 2019

Scoop: How the U.S. decided which China tariffs will be delayed

The U.S. flag flies over a container ship unloading it's cargo from Asia, at the Port of Long Beach, California. Photo: Mark Ralston/AFP/Getty Images

The Trump administration's list of goods from China that won't be subject to a 10% tariff until Dec. 15 is made up of "products where 75% or more of the 2018 U.S. imports of that product were from China," according to an email sent to trade groups from the U.S. Trade Representative Office.

Why it matters: The initial press release from the USTR said certain items would see a delay in taxes "as part of USTR's public comment and hearing process," but it did not specify whether there was a formula involved in the two list designations. The items subject to the Sept. 1 tariff are those that are less commonly imported from China.

Trump escalates tariffs on hundreds of billions of dollars worth of Chinese imports

President Trump said he would raise tariffs against China on Friday in the aftermath of China's newly announced tariffs and a steep stock market drop.

What's happening: Trump said on Friday that $250 billion worth of goods and products from China would be taxed at 30% instead of 25%, starting Oct. 1, and the remaining $300 billion worth of goods will be taxed at 15%, instead of 10%.

Go deeperArrowAug 23, 2019