A new study released by the National Retail Federation (NRF) suggests that if new tariffs on imports to the United States are implemented, U.S. consumers could lose between $46 billion and $78 billion in spending power each year.
The NRF’s study, “Estimated Impacts of Proposed Tariffs on Imports: Apparel, Toys, Furniture, Household Appliances, Footwear, and Travel Goods,” examines how former President Trump’s tariff proposals—a universal 10 percent to 20 percent tariff on imports from all foreign countries and an additional 60 to 100 percent tariff on imports specifically from China—would impact six consumer products categories:
- Apparel
- Toys
- Furniture
- Household Appliances
- Footwear
- Travel Goods
“Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices,” said NRF VP of Supply Chain and Customs Policy Jonathan Gold. “A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter. This tax ultimately comes out of consumers’ pockets through higher prices.”
The NRF said in a media release that while some U.S. manufacturers could benefit from the tariffs, the gains to U.S. producers and the Treasury from tariff revenue do not outweigh the overall losses to consumers. For example, after the tariffs, a $40 toaster oven would cost consumers $48 to $52. A $50 pair of athletic shoes would jump from $59 to $64, and a $2,000 mattress and box spring set could cost the consumer between $2,128 and $2,190.
The trade association said that within each category, higher prices and loss of spending power would hit lower-income families especially hard, assuming that brands would not absorb any of the tariff increases or negotiate new pricing with Chinese factories.
Key findings from the study include:
- The proposed tariffs on the six product categories would reduce American consumer spending power by $46 billion to $78 billion every year the tariffs are in place.
- The proposed tariffs would significantly and detrimentally impact the cost of a wide range of consumer products sold in the U.S., particularly on products for which China is the major supplier.
- The increased costs due to the proposed tariffs would be too large for U.S. retailers to absorb and would result in higher prices than many consumers would be willing or able to pay.
- Consumers would pay $13.9 billion to $24 billion more for apparel, $8.8 billion to $14.2 billion more for toys, $8.5 billion to $13.1 billion more for furniture, $6.4 billion to $10.9 billion more for household appliances, $6.4 billion to $10.7 billion more for footwear, and $2.2 billion to $3.9 billion more for travel goods.
- Based on current trade, average tariff rates for all categories would exceed 50 percent in the extreme tariff scenario, up from single or low double digits in most cases.
To view the study, commissioned by the NRF and prepared by Trade Partnership Worldwide LLC, go here.
Image courtesy Alo Yoga