Send by email

your name: email to: message:
Username: Email: Password: Confirm Password:
Login with
Confirming registration ...

Edit your profile:

Country: Town: State:
Gender: Birthday:
Email: Web:
How do you describe yourself:
Password: New password: Repite password:

Sunday, April 29, 2018

Trump's dilemma: Hit Wal-Mart or the Apple Store?

Por Nina

US consumers may be on the verge of feeling the effects of the trade shock initiated by President Donald Trump with China and other countries when a new list of Chinese imports will be announced in the coming days. After imposing import tariffs on solar panels and washing machines in January, Trump doubled its bid last month by announcing rates on imports of steel and aluminum and levies on other products for some US $ 50 billion. After Beijing responded with a list of US products that would be subject to tariffs, Trump ordered at the beginning of this month to consider additional charges of US $ 100 billion.

But a Reuters analysis of Chinese imports shows that to quickly reach taxes for US $ 100 billion, Trump may have to target cell phones, computers, toys, clothing, footwear, furniture and other consumer goods, which could lead to increases in retail prices in the country. "There is no way to avoid consumer products when thinking about how to reach $ 100 billion in imports from China," said Hun Quach, vice president of international trade for the Association of Leaders of the Retail Industry of the United States.

The impact of tariffs on consumers will depend on variables that make it difficult to calculate product by product. Companies can absorb some costs and some will even have the option to switch production from China to other countries, reducing the impact for US buyers. After the washing machines imported by LG Electronics were hit with a 20% tariff in January, the company raised prices in the United States by around US $ 50 per unit, between 4% and 8%. LG opted to absorb part of the cost of tariffs, set at a time when the construction of a new factory in the United States began, which will start producing washing machines later this year, thus avoiding US tariffs. Companies with complex supply chains, mainly those from high-tech industries, can also change the way their subsidiaries charge internal costs to reduce the impact of tariffs.

Trump's first tariff round deliberately left most consumer electronics products intact. But add another 100,000 million in products to impose taxes between US $ 506,000 million in US imports from China in 2017 without harming buyers will not be easy. The US Trade Representative could quickly find $ 100,000 million to target, but at the expense of three broad categories of consumer electronic products: cell phones ($ 44,000 million), computer equipment ($ 37,000 million) and voice recorders, images and data (US $ 22,000 million). US supply chains would also be adversely affected as many consumer electronics products depend on the export of semiconductors, software and other US supplies to China for assembly before being imported back into the country. Allies such as South Korea, Japan and Taiwan also supply cell parts for companies such as Apple Inc and feel the impact. "You end up shooting yourself in the foot, shooting your allies in the foot, and maybe you hurt the big toe of China," said Chad Bown, a researcher at the Peterson Institute for International Economics.

Trump could obtain a quarter of the US $ 100,000 million taxing toys, sporting goods and games, categories with little local content that amounted to US $ 25,500 million in imports from China in 2017. But China accounted for 81.5% of all US imports in this group, which means that there would be few alternative sources for importers that could mitigate the tariff impact on consumers. Adding clothes, footwear and furniture to the list would add the amount needed to reach US $ 100,000 million, but the rise in prices in those categories would be felt strongly by consumers. According to Census data, there are approximately 7,600 consumer and industrial goods available for tariffs with a combined value of US $ 101,000 million in which China represents 40% or less of US imports and which could be obtained from other countries.

Most include small-scale production and a wide range of products that are sold in local chain stores such as the United States such as Wal-Mart, which include clothing, pet food and lighting accessories. While the availability of these items in other countries could help limit price increases, there would still be disruptions for retailers with long-established supply chains. "The supply from another country is not an easy solution. It cannot happen overnight, "said Quach de RILA, who added that the retailers' Christmas orders for 2018 are closed. And there are few alternatives for the US $ 402 million in Christmas tree lights that come from China.

Economists polled by Reuters warned that while the imposition of tariffs can benefit US steel and aluminum producers, costs would rise for many other local producers and consumers. US exporters will also feel the impact of the trade war after China announced in March tariffs on 128 products, such as fruit and wine, which the country exports to the Asian giant and will now be taxed at 15%. US exports for another US $ 50,000 million as cars, planes, pork and soybean face a tariff of 25%.