Additional Tariffs On China Would Hit Consumer's Wallets

American consumers could lose $31 billion in spending power if U.S. tariffs are raised on common household products such as microwaves and T-shirts imported from China, according to a new report released from the National Retail Federation (NRF). 

The study, Estimated Impacts of Changes to China’s Tariff Status, examines how ending the country’s permanent normal trade relations (PNTR) trade status would impact five specific consumer product categories including toys, furniture, apparel, household appliances and footwear.

Policymakers are expressing a growing interest in changing trade policy and practices between the United States and China, including the potential removal of China’s PNTR status. 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.

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The NRF and other industry organizations are examining the potential effect this would have on businesses, consumers and the economy. Eliminating China’s PNTR status would subject imports from China – both finished goods and inputs to production – to significantly higher tariff 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,” said Jonathan Gold, vice president of Supply Chain and Customs Policy with the NRF. “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.”

Among the key findings of the report include:

• Higher U.S. tariffs on imports from China resulting from the revocation of PNTR for China would cost American consumers $31 billion, or $240 per household, in higher prices for widely used products.
• The 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%.
• Low-income households, which spend greater shares of their incomes on these products than high-income households, would be hit the hardest.
• These cost increases would negatively impact the effort to lower inflation for households overall.

View the report here.