National Retail Federation Warns Trump's Tariffs Could Be Devastating For Consumers

The National Retail Federation (NRF) has warned that President Trump's escalating trade war with China could be devastating for consumers and lead to at least one million job losses.

The Trump administration raised tariffs on $200 billion of Chinese goods from 10 to 25% around ten days ago. This is "bad news for nearly every sector of the American economy — retail, farming, manufacturing, and technology," the NRF report said. When tariffs are implemented, we have explained before, the importer on record (an American company) pays the tax to US Customs, then has two options: eat the extra costs or pass it along to consumers.

Surging consumer prices could complicate Trump's 2020 ambitions. Trump has repeatedly told the American people that China pays the tariffs, which is fake news according to NRF data.

National Economic Council Director Larry Kudlow had to undermine Trump on May 12 during a Chris Wallace interview and said, it was, in fact, American consumers who were paying the tariffs.

NRF estimates that the latest round of tariffs will cost $750 per year for the average family, and lead to one million job losses, The Hill reported Friday.

If Trump slapped the Chinese with 25% tariffs on all remaining imports from China, it would cost consumers $2,300 a year and lead to two million job losses.

"The last thing any retailer wants to do is raise prices, but if you're talking about a 25 percent tariff, there's only so much the supply chain can absorb," said NRF's senior vice president for government relations, David French, as quoted in the report.

"There are some places where, as we get tariffs, we will take prices up," Walmart Chief Financial Officer Brett Biggs said last week in an earnings call.

Macy's CEO Jeff Gennette said another round of tariffs would crush their customers' wallets.

"When you do the math, it's hard to find a path through that wouldn't impact customers," he told investors and analysts on Thursday. "It will affect a lot of apparel and accessories categories."

Retailers told the NRF that they made sure prices wouldn't go up in last year's tariff hikes, but now, they have no options to absorb the latest round of tariffs and must pass on costs to consumers.

Ed Weinstein, vice president of tax and government affairs for Jo-Ann Fabric, said his company absorbed the costs of last year's tariffs by reworking supply chains into new countries, renegotiating with suppliers, and cutting margins. But those options have been exhausted he warned, with the next step to pass on the extra costs to consumers.

"At 25 percent, we will need to pass on the pricing to our consumers. We're not happy about that, but that would just be the reality, and we anticipate that the increased pricing could lead to reduced profit, which could lead to store closings and employee layoffs," Weinstein said.

Weinstein also said the latest tariff round would hurt economic growth.

"We know that employment is good now, but if companies are forced to lay off employees that would turn the economy in the other direction," he siad.

NRF said companies in almost every sector across the US economy are warning about Trump's dangerous trade war. They're urging the administration to end all disputes with China or risk a global trade recession.

Here are more companies warning about the dangers of a trade war and how the consumer will suffer: 

  • Arnold Kamler, chairman and CEO of bicycle manufacturer Kent International, says trade war volatility has set back his company’s expansion ambitions: “Our factory employs 125 people, but that could grow to 300, I thought: Eventually, we could build 1 million bicycles, right here in the United States. But Trump’s protectionist measures are getting in our way. We don’t plan to lay anyone off, but until the situation stabilizes, and we have some clarity about our future, we’ll just continue buying bike frames from China.”
  • High-end audio equipment manufacturer AudioControl imports about 25 percent of its parts from China. CEO Alex Camara says it’s been painful enough absorbing costs from the 10 percent tariffs, but now that they’ve climbed to 25 percent, he’ll be forced to “raise overall prices to dealers and retailers by 8 percent to 12 percent, costs that would be passed to consumers and that could crimp sales.” He’ll also have to restrict investments in new technologies.
  • Polaris, manufacturer of snowmobiles, ATVs and motorcycles, will take a hit of about $195-$200 million with the introduction of new tariffs. CEO and chairman Scott Wine says Polaris has already moved $10 million worth of supply chain manufacturing out of China, and may need to move more: “Ultimately if this was not resolved, we would have no choice but to move production to Mexico. This would essentially be forcing me to push jobs outside the U.S.”
  • Given just five days’ notice of the most recent round of tariffs, many importers will have to pay higher prices on orders already in motion. Missouri-based manufacturer Cap America has roughly $1 million worth of baseball hats already ordered that will now be hit with the higher tariff. CEO Phil Page says, “It’s very difficult to understand what the President is going to do by a business perspective. To spring it on us all at once like this is a very poor judgment on his part.”
  • Beth Aberg, owner of Random Harvest Home Furnishings in Washington, D.C., says the new 25 percent tariffs will stop her stores from stocking almost everything they carry from China: “Because furniture items are already higher ticket, an increase from 10 percent to 25 percent is really significant. I don’t think the administration understands how much damage it’s doing, both to the U.S. economy and the consumer.”
  • Tiffany Zarfas Williams, owner of the Luggage Shop of Lubbock in Texas, says that since tariffs went into effect last year, her vendors have raised prices on a regular basis: “I definitely want China to be held accountable, but I don’t know why we are punishing consumers in our own country. That’s the part that’s hard to understand as a small business owner in Texas.”
  • The threat of tariffs is creating uncertainty for Lisa Hu, founder of handbag company Lux & Nyx. She has largely abandoned plans to sell her products in department stores because she worries about new tariffs that could potentially arise between the time stores place an order and when the imports arrive: “Are these tariffs going to happen? Are they not? I’m having to make long-term decisions based on the little information I have now.”
  • Tariffs are dampening international plans for Cleveland distiller Cleveland Whiskey, which has laid off two employees it could no longer afford to pay. CEO Tom Lix says, “By 2018, there was not a single bottle of Cleveland Whiskey sold in Europe. The tariff causes the prices on the whiskey to be marked up. … The fact that we are manipulating these trade deals and using it as a political tool is absolutely absurd, and it hurts a whole lot of people. Mark my words, the economy won’t stay this good forever. We are making things worse for ourselves.”
  • Indiana farmer Brent Bible has seen a 10 percent price reduction in corn and 20-25 percent reduction in soybeans: “I want there to be no mistake that the consumer is paying for these tariffs. I wish China was paying them. I certainly would feel better about it that way.”
  • David Stephens, a soybean grower from Kentucky and president of the American Soybean Association, says “farmers are in a desperate situation” after getting caught in the crosshairs of retaliatory tariffs from China: “We need a positive resolution of this ongoing tariff dispute, not further escalation of tensions.”
  • Dale Livingston, a fifth-generation farmer of soybeans, corn and wheat from Illinois, is eager for the trade war to end — especially since its negative effects have been compounded by bad weather for crops. He’s never seen so many negative things happening at the same time for farmers: “Let’s quit playing these games and get it over with.”