Tariff ‘stacking' adds another headache for United States importers
John Hamer, president of Rodgers Wade Manufacturing in Paris, Texas, makes store fixtures for big retailers like Ross Dress for Less and Ulta Beauty. He sources many of the goods from China, which until recently meant he paid 70 percent in tariffs on metal fixtures.
'The media was saying it was 30 percent, but that was never true,' he said, referring to the tariff rate for China announced in May as part of a truce between the Trump administration and Beijing as it negotiated a broader deal.
That's because Hamer's 30 percent tariff was stacked on top of existing tariffs, including a tariff on Chinese steel products that varies depending on the amount of steel used in a fixture. When US President Donald Trump adds a new tariff the old ones don't go away.
Some companies will pay far more because of a phenomenon called tariff stacking, the latest complication for US importers trying to navigate Trump's on-again, off-again trade war. The reality for many US businesses is that their tariff bills are often far higher than the headline number touted in trade talks.
Tariff stacking applies to any country exporting to the US, but the most extreme cases tend to be with China, where the US has accumulated a long list of sometimes hefty existing tariffs, implemented under different provisions of US trade law.
The latest twist is an announcement that the two sides have agreed to a 55 percent tariff, but that's in part only an estimate of what the average pre-existing tariffs were. Hamer isn't sure what his tariff total will be now, but he figures it couldn't get much worse. 'Hopefully this will bring the (tariff) number down - and some of the clients who've been sitting on the sidelines will go ahead and place orders,' he said, 'because it's been all over the map.' Hamer is searching for suppliers outside China to avoid his stacked tariffs.
He's checked Mexico and is planning a trip to India next month as part of the effort. In the meantime, he is passing through all the tariffs. 'The customers pay the tariff,' said Hamer. 'When it comes in, we say, 'Here's the tariff bill.'' Many businesses are still hoping for a reprieve from President Donald Trump's trade war. Federal courts, including the US Court of International Trade, have ruled that Trump's imposition of tariffs exceeded his authority.
A federal appeals court is considering the administration's appeal to that ruling, and the tariffs remain in effect while that plays out, a process expected to take months. Some are counting on tariff exemptions, a popular tool used by companies during the first Trump administration to get goods imported without the taxes.Michael Weidner, president of Lalo Baby Products in Brooklyn, is one of them. 'We believe there should be an exemption for baby products,' he said. 'Same with toys.' The Trump administration has said it will resist creating such carve-outs.
And even during the last trade war, it was a complex process. For instance, Lalo imports a 'play table' from China that happens to be classified under a customs category that was subject to a 25 percent tariff under a part of trade law that aims to fight unfair trade practices. So Weidner has been paying 55 percent tariffs on those, thanks to stacking.
Trump campaigned on a vow to use tariffs to pull manufacturing back to US shores and collect revenue to help fund a major tax cut.
His battle with China quickly spiraled into a conflagration with the US imposing a 145 percent across-the-board tariff that shut down much of the trade between the world's two largest economies. — Reuters The agreement to curb the tariffs is part of a larger effort to negotiate individual deals with most of the US's trading partners.
On Wednesday, a White House official said the 55 percent figure represents a sum of a baseline 10 percent 'reciprocal' tariff Trump has imposed on goods from nearly all US trading partners; 20 percent on all Chinese imports because of punitive measures Trump has imposed on China, Mexico and Canada associated with his accusation that the three facilitate the flow of the opioid fentanyl into the US; and finally pre-existing 25 percent levies on imports from China that were put in place during Trump's first term.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Qatar Tribune
16 hours ago
- Qatar Tribune
Trump says to set tariffs on steel, semiconductors in coming weeks
Agencies United States will announce tariffs on imports of steel and semiconductor chips in the coming weeks, President Donald Trump said on Friday. 'I'll be setting tariffs next week and the week after on steel and on, I would say, chips,' Trump told reporters aboard Air Force One as he headed to a meeting with Russian President Vladimir Putin in said the rates would be lower at the start to allow companies to build up domestic manufacturing in the U.S., rising sharply later, following a pattern he has also outlined for tariffs on pharmaceuticals. He gave no exact rates. 'I'm going to have a rate that is going to be lower at the beginning – that gives them a chance to come in and build – and very high after a certain period of time,' he said. Trump said he felt confident that companies would opt to manufacture in the United States, rather than face high has upended global trade by imposing sharply higher duties on nearly all countries' exports to the United States, along with tariffs on specific sectors, such as in February raised tariffs on steel and aluminum to a flat 25%, but he announced in May that he would double the rate to 50% to boost domestic was not immediately clear if another tariff increase on the metals was in the offing. Trump said last week he would impose a tariff of 100% on imports of semiconductors, but companies that committed to building up manufacturing in the United States would be exempt.
Qatar Tribune
16 hours ago
- Qatar Tribune
Weak domestic demand, freshdeflation weigh on China's growth
Agencies China's factory output growth fell to its weakest pace in eight months in July, while retail sales slowed markedly, adding pressure on policymakers to deliver more stimulus to bolster domestic demand and shield the $19 trillion economy from external shocks. The underwhelming indicators come as officials navigate pressure on multiple fronts ranging from U.S. President Donald Trump's trade policies to extreme weather, excessive competition in the domestic market, and chronic weakness in the property sector. Industrial output grew 5.7% year-over-year in July, National Bureau of Statistics (NBS) data showed on Friday, the lowest reading since November 2024, and compared with a 6.8% rise in June. It missed forecasts for a 5.9% increase in a Reuters poll. Retail sales, a gauge of consumption, expanded 3.7% in July, the slowest pace since December 2024, and cooling from a 4.8% rise in the previous month. They missed a forecast gain of 4.6%. A temporary trade truce reached between China and the United States in mid-May, which was extended by another 90 days this week, has prevented U.S. tariff rates on Chinese goods from returning to prohibitively high levels. However, Chinese manufacturers' profits continue to take a hit from subdued demand and factory-gate deflation at home. 'The economy is quite reliant on government support, and the issue is those efforts were 'front-loaded' to the early months of 2025, and by now their impact has somewhat faded out,' said Xu Tianchen, senior economist at the Economist Intelligence Unit. That policy support has helped the world's second-largest economy avoid a widely anticipated sharp slowdown, along with factories taking advantage of the U.S.-China trade truce to front-load shipments, but analysts say weak demand at home and global risks will drag on growth in coming quarters. Friday's data drew a mixed reaction from investors, with Chinese blue chips up 0.5% and Hong Kong stocks down 1.1% in afternoon trading. Fixed asset investment grew just 1.6% in the first seven months of the year from the same period last year, compared with an expected 2.7% rise. It had expanded 2.8% in the first half.'Firms may be running on existing capacity rather than building new plants,' said Yuhan Zhang, principal economist at The Conference Board's China Center. 'The July industrial value-add breakdown tells a more nuanced story than the weak fixed asset investment headline,' he added, pointing to China's automobile manufacturing, railway, shipbuilding, aerospace and other transport equipment industries as 'outliers (that) indicate policy-driven, high-tech and strategic sectors are still attracting substantial capital.' Beijing has recently stepped up policy measures and made pledges to prop up domestic consumption and curb excessive price competition, as authorities strive to lift economic growth towards the government's 2025 target of around 5%. The government's renewed crackdown on 'disorderly' competition will help prices recover, Fu Linghui, a spokesperson for the NBS told reporters following the data release. Officials worry overcapacity among Chinese manufacturers and the price cuts made to clear stock are raising expectations among consumers, who are showing few signs of loosening their purse strings, for ever cheaper goods. China's new yuan loans contracted in July for the first time in 20 years, separate bank lending data showed on Wednesday, pointing to weak private sector demand. A protracted slowdown in the nation's crucial property sector, a key store of household wealth, continues to put pressure on consumer spending. New home prices extended a stagnant phase for over two years, falling 2.8% in July year-on-year, versus a 3.2% drop in June.'The accelerating downturn in property prices in the past few months signals that further policy support is needed,' Lynn Song, ING's chief economist for Greater China, said in a note. 'It's difficult to expect consumers to spend with greater confidence if their biggest asset continues to decline in value every month.' Economic activity has also been impacted by extreme weather, from record-breaking heat to storms and floods across the country, disrupting factory production and day-to-day business operations. The latest Reuters poll projected China's GDP growth to slow to 4.5% in the third quarter and 4.0% in the fourth, suggesting that Beijing has its work cut out in getting households to spend more at a time of uncertainty over job security and mounting headwinds from Trump's global trade war. China's 2025 GDP growth is forecast to cool to 4.6% – falling short of the official goal – from last year's 5.0% and ease even further to 4.2% in 2026, according to the poll. 'We see little reason to expect much of an economic recovery during the rest of this year,' said Zichun Huang, China economist at Capital Economics.'The lack of committing to any additional fiscal support in the latest Politburo meeting points to a fading fiscal tailwind.'
Qatar Tribune
16 hours ago
- Qatar Tribune
QNB: Commodity prices signal softer global growth ahead
Tribune News Network Doha The global economy is adjusting to a more restrictive trade environment after a turbulent first half of 2025, marked by elevated uncertainty from US President Donald Trump's sweeping 'Liberation Day' tariff measures, according to QNB Economic Commentary. While economists and investors remain cautious, commodity markets are sending a more reassuring signal: moderating growth prospects, contained inflation risks, and resilience in underlying demand. Despite the initial rounds of US trade deals failing to fully resolve policy uncertainty, commodity prices are providing clearer indicators of real-time economic momentum. Analysts point to three factors suggesting that markets are leaning toward a scenario of moderate slowdown rather than runaway inflation or sharp recession. The overall performance of commodity indices remains well below their cyclical highs of May 2022 and has been trading in a narrow range since the start of 2025. This stability challenges extreme macro narratives, showing neither an uncontrolled growth re-acceleration nor signs of a steep downturn. Energy and industrial metals have avoided major price spikes, reinforcing the global disinflation trend despite the sharp depreciation of the US dollar and tariff-related inflation risks at home. Base metals including copper, aluminium, and nickel have posted modest gains this year, reflecting optimism tied to emerging technologies, electric vehicles, artificial intelligence, and Asian industrial demand. The copper-to-gold ratio, a closely watched gauge of growth and inflation expectations, continues to trend lower. In a pro-growth policy environment, copper – seen as a growth-sensitive asset – would typically outperform gold, pushing the ratio higher. Its current decline instead reflects investor caution, consistent with expectations of slowing growth alongside stableinflation. Gold prices remain near record highs of about USD 3,330 per troy ounce – up nearly 80% since the 2022 commodity peak. Analysts attribute this strength to geopolitical uncertainty and demand for jurisdiction-free assets, rather than fears of imminent inflation. Silver, which has lagged gold in recent years despite its industrial role in green technology, has recently begun to recover, hinting that industrial demand may have bottomed. However, silver's underperformance relative to gold reinforces the view that markets are not pricing in a broad-based upcycle. Taken together, the trends suggest that commodity markets are pricing in a 'soft landing' for the global economy – moderate growth paired with continued disinflation. While Trump's tariff agenda has unsettled global trade, the absence of major commodity volatility indicates that industrial activity remains resilient and inflation expectations well anchored. For investors, the message from commodities is clear: despite political turbulence, the risk of runaway inflation or a sharp recession appears contained.
