Sometimes, it’s easier to see the impact of something on the small scale.
Though trade tariffs have been flying back and forth for some time, they’ve mostly been discussed on an abstract, higher level: how will they impact the global economy? For the average American consumer, however, the picture is a bit more specific.
Which Walmart Products Will Go Up in Price?
Walmart is so concerned about the tariffs that it has directly implored the government not to levy them. Here are a few of the products that Walmart listed as being particularly vulnerable:
- Pet supplies: dog leashes, dog collars, cat leashes, pet costumes, and pet rawhide.
- Toiletries: hair care, bath prep, makeup mirrors, toothbrushes, and electric razors.
- Luggage: hard luggage, tote bags, duffle bags, hand bags, and backpacks.
- Holiday goods: wrapping paper and Christmas lights.
- Furniture: futons, wooden furniture, miscellaneous furniture, and mattresses.
- Appliances: vacuum cleaners, air conditioners, oil-less fryers, and toaster ovens.
- Electronics: HDMI cables, video cables, extension cords, and auxiliary cords.
In addition to this, Walmart noted that supply chains may experience significant disruption for items such as their bicycles. Tariffs were initially levied at 10% to eventually be raised to 25%, but it remains to be seen how these tariffs will directly impact the consumer.
Retail stores do have the option of absorbing the price differentials, but unlikely that at least some of the costs involved will not be passed along to the consumer. As many of these items are basic items that most households would need to purchase, it could have a significant impact on overall consumer buying power.
Sourcing Alternative International and Domestic Goods
There is still the potential that alternative goods could be sourced either domestically or within other countries. The above products are going up in price specifically because there are now additional tariffs levied against Chinese imported products, and because many of the products supplied to Walmart are sourced in China.
With new trade tariffs in place, it may become less expensive to source these products from other countries that currently don’t have these restrictive tariffs. If it is possible to find more affordable alternatives to the above goods, Walmart may be able to continue supplying these goods without having to sharply increase their prices.
As a side effect, this would also mean that the trade war would have the desired response on China, insofar as it would reduce purchasing from China and potentially have a cooling effect on the Chinese economy.
A few items that Walmart was concerned about were dropped from the list before the tariffs began, including car seats, child seats, high chairs, patio furniture, and a number of electronics. Other than this, tariffs have been initiated against China, and it is predicted that prices are soon to begin rising.
The Impact for the Modern Investor
When it becomes difficult for the average consumer to purchase basic goods, the economy itself may falter. Walmart is often seen as the quintessential American brand, but overall retail has been suffering. Retailers may suffer even more if local products increase in cost and consumers cut back on their spending.
From an investor standpoint, the impact of trade tariffs may be a mixed bag. Though it may hurt both global and local economies, trade tariffs are also going to create opportunities in a number of markets. Domestic producers are now more competitive with Chinese producers, and in some markets the profit margin difference may be enough to make domestic producers a viable option once again.
Of course, these changes are also highly volatile and highly political, with very few individuals confident what the consequences will be in the long-term. Tariffs are still being levied back and forth, which means that it is possible that additional tariffs may be coming at any time. Further, tariffs are also being levied against American goods, which may not only weaken the American economy, but could also cause some setbacks for those within heavily tariffed industries.
All of these things will need to be considered before investing in what is likely to be a period of exciting economic change.
Regards,
Ethan Warrick
Editor
Wealth Authority
