|“You want toys this Christmas, junior? You’ll get fewer of ’em if they’re from China, kid!”|
Until very recently, the Trump administration has taken care not to hit Chinese exports of consumer goods–especially electronics–with its assorted tariffs. Now, though, the gloves have fully come off as he announced that practically all remaining PRC imports would be hit by these import taxes. 10% tariffs, here we come. What’s particularly interesting is the timing: Trump attributes it to China not buying more US agricultural products as had been agreed to as well as its inaction on controlling illicit fentanyl production destined for the US.
At any rate, hitting Chinese goods with tariffs–consumer goods most notably–is spectacularly bad timing from the perspective of Chinese manufacturers and American retailers gearing up for the Christmas season. The South China Morning Post sees it as nothing less than a “war on Christmas” declared by Trump:
Many of the goods on the fourth list of trade war tariffs are consumer products often given as Christmas gifts. Of the US$300 billion, mobile phones make up the largest portion at US$44.8 billion, followed by laptops at US$38.7 billion, toys at US$11.9 billion, and video game consoles at US$5.4 billion, according to US International Trade Commission figures.
“This time the list includes toys. So you might say the Trump Administration has now officially declared war on Christmas,” said Jock O’Connell, an international trade adviser to research firm Beacon Economics.
With less than a month before the proposed deadline, the window to front-load – that is, dispatching shipments early to avoid the new tax – is narrow. It usually takes 17 days for sea shipments from China to reach the West Coast of the US and 27 days to New York on the East Coast.
“I shouldn’t think this move would result in a substantial surge in imports,” O’Connell added. “Even if your Chinese suppliers had goods on hand, you’d have only a couple of weeks at most to get them on a ship bound for a West Coast port.”When the Office of the United States Trade Representative (USTR) filed a notice of the previous increase in tariffs on US$200 billion of Chinese goods from 10 per cent to 25 per cent in May, there was some relief for companies that could prove they had made their purchases before the tariff was announced.Some hope that goods at sea before that cut off point could potentially be exempt from the new tariff, if a similar pattern is followed this time around, but this is unconfirmed. “There is definitely a short lead time,” said Jennifer Diaz, a lawyer at Diaz Trade Law in Miami. “We will see if customs uses September 1 as an export deadline like they have previously.”
Further complicating matters is the fact that US inventories and warehouses are already nearing capacity due to previous bouts of front-loading designed to beat earlier rounds of tariffs, particularly last year. US seaports are also in peak import season, with space already tight at many important hubs.