President Trump has focused on the trade deficit since his candidacy, and has sought to rewrite global trade rules since taking office. In 2018, he announced a series of tariffs that have sparked a trade war between the United States and China and other countries that is continuing to threaten the U.S. economy.
Why it matters to retailers
Retailers rely heavily on imported merchandise to provide American families with the products they need at prices they can afford. Tariffs are a tax paid by American companies that import products – not by the foreign governments targeted by the tariffs. And tariffs of the levels imposed in the past year are too large for retailers to absorb, meaning they are ultimately passed on to consumers in the form of higher prices. Many of the products affected by the current tariffs are no longer made in the United States, meaning retailers cannot simply switch to U.S. suppliers.
The first tariffs against Chinese products took effect in the summer of 2018 following an investigation by the Office of the U.S. Trade Representative under Section 301 of the U.S. Trade Act of 1974 looking at China’s unfair trade practices regarding forced technology transfers, intellectual property rights enforcement and other actions. NRF testified in opposition to the tariffs at a USTR hearing, saying “prices will rise and the economy will suffer.” Nonetheless, 25 percent tariffs on $34 billion worth of goods took effect in July and were imposed on another $16 billion in August.
China responded with an equal amount of tariffs on U.S. products, and Trump replied with 10 percent tariffs on $200 billion worth of Chinese products that took effect in September 2018. Those tariffs were originally set to increase to 25 percent this January, but the date was pushed back to March 1 after Washington and Beijing agreed to hold trade talks. The talks broke down in the spring, however, and the increase finally took effect this June.
Trump then said he was considering 25 percent tariffs on an additional $300 billion in Chinese goods, which would bring virtually all imports from China under tariffs. But he announced after meeting with Chinese President Xi Jinping at the G-20 summit in late June that talks would resume and that he would delay the $300 billion round in the meantime. Unlike earlier tariffs, the new round would include a wide range of consumer products, from diapers and toys and apparel and appliances. NRF testified at a USTR hearing that the new tariffs would cost U.S. consumers $4.4 billion a year for apparel, $3.7 billion for toys, $2.5 billion for footwear and $1.6 billion for appliances. The estimates came in a new study conducted for NRF by Trade Partnership Worldwide.
Just a few weeks later, Trump said on August 1 that the tariffs would take effect at the beginning of September, but at 10 percent rather than 25 percent. Two weeks after that, Trump said some of the tariffs would be delayed until December 15 to avoid any impact on holiday spending but that others would still take effect on September 1.
NRF welcomed the delay but said the tariffs will still “result in higher costs for American families and slow the U.S. economy.” NRF urged the administration to “develop an effective strategy to address China’s unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers.”
Last fall, NRF and more than 100 other trade associations formed Americans for Free Trade, a new coalition aimed at opposing tariffs and highlighting the benefits of international trade to the U.S. economy. The new group, in turn, joined with the Farmers for Free Trade coalition to launch the Tariffs Hurt the Heartland campaign and track the impact of the tariffs. According to a study conducted for the campaign, U.S. companies paid $2.1 billion in tariffs on Chinese products in November 2018 alone, up from $363 million a year earlier.
NRF has urged the administration to “change course and stop playing a game of chicken with the U.S. economy.” NRF believes tariffs will drive up the price of both imported consumer products and U.S.-made products built from imported parts, amounting to a tax on American consumers that could offset the benefits of federal tax reform that took effect in 2018.
In addition to forming the new coalition and helping lead the Tariffs Hurt the Heartland campaign, NRF has voiced concerns about the tariffs with the White House and Congress, and has brought together representatives of retail and other affected industries. NRF has also worked extensively with the news media, warning against tariffs in outlets ranging from the New York Times to the Today Show. In 2018, NRF aired a television commercial on Saturday Night Live featuring actor and economist Ben Stein recreating his role from the movie "Ferris Bueller’s Day Off" to explain that tariffs are “B-A-D economics.”
Steel and aluminum tariffs
While the tariffs above are specific to China, Trump in 2018 also imposed tariffs of 25 percent on steel and 10 percent on aluminum from a wide variety of countries under Section 232 of the Trade Expansion Act of 1962, which allows tariffs based on national security issues.
NRF called the steel an aluminum tariffs a “self-inflicted wound on the nation’s economy” and said they would drive up prices for U.S. consumers on metal-dependent products from canned goods to automobiles. NRF has endorsed legislation that would require congressional approval of Section 232 tariffs, urging Congress to “play a leading role in mitigating escalating trade tensions with our strongest allies.”
In September 2018, NRF was one of the sponsors of a "Trade Builds America" event in Washington where small businesses outlined concerns with the steel/aluminum and other tariffs. Lincoln, Neb., appliance dealer Ron Romero spoke on behalf of NRF, saying the tariffs had already driven up the price of refrigerators as much as 12 percent, prompting customers to choose lower-cost models or skip purchases altogether.