Days after burning China with $34 billion in tariffs on Chinese goods, President Donald Trump turned up the heat.
Trump said Tuesday he intends to target another $200 billion in Chinese imports — from fish and mattresses to baseball gloves and phone components — with 10-percent taxes.
This round could prove particularly painful for the average American.
What’s Different?
The earlier sets of tariffs, $34 billion imposed on machinery and electronics and another $16 billion scheduled for electronics, were intentionally designed to hit manufacturers and producers.
In those cases, supply chains could absorb most of the increased costs of goods and pass just a portion to consumers in the form of end-product price increases. Prices for tools sets, batteries and remote controls were expected to ultimately rise.
This time, consumer products — dog leashes, handbags, furniture, cigarettes and apparel — are being directly targeted, and without the supply chain buffer, the consumer shopping experience will become unavoidably more expensive.
“The threat to the U.S. economy is less about a question of ‘if’ and more about ‘when’ and ‘how bad,’” David French, an executive at the National Retail Federation, told The New York Times.
The tariffs are a “reckless strategy that will boomerang back to harm U.S. families and workers," French said.
How Bad Could It Get?
China’s expected retaliation to the latest announcement will be met with duties on another $200 billion in products, Trump said.
If the second $200-billion blow is enacted, that brings the total to $450 billion in levies on Chinese goods.
The U.S. receives $505 billion in Chinese imports, meaning just about everything “Made In China” will be more expensive than before the trade war.
At the time of publication, iShares FTSE/Xinhua China 25 Index (ETF) FXI traded down 2.4 percent at a rate of $42.
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