Get out your holiday shopping lists. New tariffs are coming as of December 15th, and there are a lot of items that you’re going to want to purchase before then.
Throughout most of the year, tariffs have been avoided on consumer goods. Now, the consumer goods are getting hit hard. It will no longer be up to many companies to absorb the costs of the tariffs. Instead, the consumer is going to see prices rising.
A first round already took effect. Another round is coming.
These Items Just Got More Expensive
First: as of September, a new wave of tariffs were initiated. 52% of shoes and 87% of textiles were subject to new tariffs. The shoe industry has been particularly outspoken against these taxes, because they are among those hardest hit. Sneakers, work shoes, boots, and sandals are all being taxed at higher rates coming from China.
As of now, 69% of the consumer goods that are coming from China are currently under tariffs. By December 15th, 99% of consumer goods will be tariffed. The average tariff will have increased from 3.1% to 24.3%, grossly inflating the costs for many items. It’s unknown what kind of impact this is going to have on the economy as a whole, but many argue that it’s a war worth fighting.
A Second Round of Tariffs on December 15th
Since consumer items are now being impacted, households are going to see the prices go up in general. Many items sold in the United States are made in China, even by American companies.
As a whole, tariffs will impact:
- Clothing: With the increased taxes on textiles, both adults and children are going to find clothing more expensive. And that’s every type of clothing, from casual, fashion clothing to professional suits. Parents may be hardest hit, due to children outgrowing their clothing so quickly.
- Shoes: That’s right, it’s shoes again. At this point you can expect that some shoe companies are going to need to downsize or go out of business entirely. These aren’t just fashion-forward shoes that are being impacted. Sports shoes, such as golf shoes, are being targeted by the new wave of tariffs. Even removable insoles are being targeted.
- Electronics: From laptops to smartphones, expect electronic devices to get more expensive across the board. Not only does China do the assembly and production for many brands, such as Apple, but they also create circuit boards that are used throughout many types of technology. If there’s a big ticket purchase you’ve been meaning to make, such as a larger television, now is the time to commit.
- Children’s essentials: Children’s toys, walkers, bassinets, and strollers are all going to be taxed. Many of these products come from China, and some of them also use textiles that are made in China. If you have a child on the way, purchase everything you need — from stroller to crib — for them now. Historically, child essentials have usually been left out of the trade war, but are being introduced now.
- Household appliances: Where was your microwave or toaster manufactured? Probably China. Household appliances like toaster ovens and stand mixers are about to become more expensive, so if you were expecting to purchase one as a gift this year, consider purchasing it before the taxes increase.
- Holiday items: Things like greeting cards, ornaments, and nativity scenes often come from China. You may want to do all your holiday shopping early this year, and that includes decorations.
The bottom line for most Americans is that they can expect their pocketbook to feel a little lighter. Buying consumer goods is going to be expensive. Even American brands rely upon parts and manufacturing from China.
On a broader scale, a pull back on consumer spending could also mean an economic pull back, or even a recession. With the stock market operating as erratically as ever, a crash could be imminent.
For now, companies should keep an eye on the Chinese market, and how the domestic market will react to these changes. Some companies may start moving their manufacturing and distribution from overseas, while others may try to take advantage of the lower Chinese currencies. While larger companies are likely to weather the storm, it’s small businesses that are most likely to close.