24% of retailers in an exclusive Internet Retailer/Bizrate Insights survey plan to increase prices this holiday season because of tariffs.
That could have significant implications for online sales this holiday season as President Trump on Thursday announced a decision to impose a 10% tariff on $300 billion in imports from China. Those tariffs will touch upon a number of consumer goods typically bought online, including shoes, clothing, leather goods, luggage, toys and games.
To date, the trade war has had little impact on consumers’ sentiment. For example, Bloomberg’s consumer comfort index, a weekly phone survey conducted since 1985, is running at its highest levels since 2000. And similar gauges of the household sector, such as the University of Michigan’s consumer sentiment index and the Conference Board’s various consumer confidence surveys, have recently posted the best results since the eve of the early 2000s recession. That suggests that consumers have not yet felt the impact of the straining U.S.-China tension.
That’s largely been by design, as U.S. Trade Representative Robert Lighthizer has so far spared consumers by exempting most retail products from the 25% tariffs he imposed on $250 billion worth of goods. But that approach seems likely to change as Trump has shown he’s growing impatient for a deal and is prepared to risk denting the economy and American consumers’ wallets to break the deadlock with an increasingly obstinate Beijing.
But new levies appear likely to change that dynamic given the wide range of products that will be impacted.
However, some experts aren’t sure that the move will lead to Trump’s desired outcome.
“New tariffs will by no means bring closer a deal that the U.S. wants, it will only make it further away,’’ Hu Xijin, the editor of the state-run Global Times, said on Twitter. “I think the Chinese will no longer give priority to controlling trade-war scale, they will focus on the national strategy under a prolonged trade war.’’
Damien Ma, a China expert who leads the Paulson Institute’s in-house think-tank, said one message emerging from a Chinese politburo meeting on the economy earlier this week was that officials were already preparing for a worst-case scenario and ready to cope with more tariffs and a further slowdown in growth.
“If the feeling in Beijing is that they can withstand this because they’ve already priced it in, then I think that’s not a good outcome for negotiations,’’ Ma said.
A significant share of online retailers, 15%, also plan to weather the tariffs by absorbing the increased costs to avoid raising prices, according to the Internet Retailer and Bizrate Insights survey of 106 retailers, which was conducted in July, before Trump announced the latest tariffs.
April Berthene and Bloomberg contributed to this story.