NRF: Increased tariffs on Chinese goods would hurt consumers

An increase of U.S. tariffs on Chinese made goods could have a major impact on American consumers’ spending power.

That's according to the National Retail Federation’s latest study, “Estimated Impacts of Changes to China’s Tariff Status,” which finds that consumers could lose $31 billion in spending power if U.S. tariffs are raised on common household products like microwaves, t-shirts, toys, footwear and more imported from China. This figure comes out to $240 per household in higher prices for widely-used items.

“Many elected officials and others have expressed a growing interest in a number of trade policy and practice changes that would affect U.S. trade with China,” said NRF. “Chief among them is a proposal to terminate China’s ‘permanent normal trade relations’ (PNTR) trade status, subjecting imports from China to ‘Column 2’ tariff rates, which can be much higher than ‘normal trade relations’ rates. Some have even suggested raising the rates higher than ‘Column 2’ rates.”

PNTR is a legal status that extends to China the same tariff rates applied to other U.S. trading partners. Congress approved China’s PNTR status in 2000 when it officially joined the World Trade Organization.

NRF estimates that if China’s PNTR status were terminated, prices of toys would increase by more than 21%, or $93 per household. The prices of other consumer goods would rise as well: Household appliances by nearly 7%; shoes by nearly 5%; furniture by 4%; and apparel by nearly 2%.

NRF notes that lower-income households would be hit hardest by these estimated price increases, and that they would negatively impact the ongoing effort to lower inflation rates.

“Even though significant efforts have been made in recent years to diversify sourcing, China continues to play an important role in the supply chain of many retailers and other global industries, from sourcing raw materials to manufacturing and production,” NRF VP of supply chain and customs policy Jonathan Gold said. “It would be impossible for American families to escape the higher costs from dramatic tariff increases on necessities such as apparel, footwear, furniture, appliances and toys.”

The full NRF report can be found here.