A host of U.S. retailers on Monday sent a letter to the White House warning that American consumers will pay more for the goods they sell if the trade sanctions President Trump has threatened against China are implemented.
A U.S. president has wide discretion to retaliate against China under Section 301 of the Trade Act, including bans on investments and tariffs on Chinese goods. The Trump administration is reportedly mulling action "within days" and could impose more than $60 billion in tariffs, per Reuters.
Among the 25 signers of the letter are: Abercrombie & Fitch, American Eagle Outfitters, Costco, Dollar Tree, Gap Inc., J.C. Penney, Kohl's, Ikea North America, Macy's, Sears Holdings, Target and Walmart.
The holiday season was among the best for retail in recent years as consumer confidence has surged amid an economic recovery that seems to have finally taken hold and as wages have begun to rise. But tariffs and other sanctions being contemplated at the White House could upend that.
In their letter, the retailers warned that consumers would pay more for goods that they say already sport high import fees. "[F]amilies shopping in our stores pay higher prices because America already levies import taxes as much as 32% and 67% on basic clothes and shoes," the letter reads. "Applying any additional broad-based tariff as part of a Section 301 action would worsen this inequity and punish American working families with higher prices on household basics like clothing, shoes, electronics, and home goods."
The retaliation being contemplated by the U.S. government includes widespread tariffs on consumer goods, like electronics, apparel, footwear and home goods, according to a press release from The National Retail Federation, Retail Industry Leaders Association and American Apparel & Footwear Association emailed to Retail Dive.
"We agree it's time to address China's unfair trade practices, but we can do so in a way that doesn't destroy jobs, create uncertainty for businesses and increase every American's cost of living," NRF President and CEO Matthew Shay said in a statement. Sandy Kennedy, president of RILA, added: "This is not American industries crying wolf."
As with Trump's pull-out of the Trans-Pacific Partnership and his rhetoric about renegotiating NAFTA, his actions through Section 301 will directly impact the retail market and consumers, adding to costs and disrupting the supply chain, according to Matt Hohenshil, vertical manager of retail and beauty at TPS Logistics. For many consumers, price hikes on consumer goods could wipe out their windfalls under the new tax reform law, and retailers are unlikely to turn to U.S. sources for their goods, he warned, in part because that wouldn't be any cheaper.
"I don't see major retailers bringing these jobs and production of these products back to the U.S. as the end consumer won't want to pay for the end cost that comes with a much more skilled U.S. labor force," he said in an email to Retail Dive. "We could be seeing major retailers looking at other global options for a particular product line impacted by this new tariff."