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Trump's Tariffs: Why Retail Could Look To China

Forbes

12 hours ago

Business
Forbes

Trump's Tariffs: Why Retail Could Look To China

After a summer of rapid-fire tariff announcements, the U.S. trade picture is shifting in ways that will reshape holiday and beyond. The cascade began with the sweeping 'reciprocal' tariff in April, which applies to virtually all imported goods, with rates varying 10-50% by trading partner. On top of this universal baseline, Washington has layered targeted surcharges on categories such as autos, steel and aluminum, and copper, along with country-specific moves that will raise India's overall rate to 50% on Aug.27. A 90-day extension of the U.S.–China tariff truce on Aug. 11 pushing any new duties until early November. This extension pauses planned hikes including those on Chinese goods, and keeps China's existing rates unchanged. The pause shifts competitiveness back toward Chinese manufacturers just as retailers lock in Q4 production. Inflation Impact Is Still Unclear On Aug. 7, the Budget Lab at Yale updated its tariff model to include actions through Aug. 6. The report estimates an average overall effective tariff rate of 18.6% before substitution, with a short-run price impact of about 1.8% and an average household income loss of roughly $2,400, assuming no monetary policy offset. One day later, the Bureau of Labor Statistics reported July CPI. Headline inflation rose 0.2% month over month and 2.7% year over year. Core inflation increased 0.3% on the month and 3.1% on the year. The numbers suggest that, for now, tariff pass-through has not yet driven a sharp reacceleration in consumer prices as effects tend to lag. Peak inflation impacts could hit as holiday inventory arrives on shelves. Tariff Milestones Announced April 2, this measure applied a baseline duty to nearly all imports, with reciprocal rates varying by country. It is the foundation for today's trade environment and applies across categories from apparel to electronics to food. Targeted Section 232 actions add extra duties for specific categories, including automobiles (effective April 3), auto parts (effective May 3), steel and aluminum (rates doubled to 50% in June), and copper-intensive products (50% of copper input value, effective Aug. 1). These charges stack on top of the universal tariff. The U.S. Court of International Trade struck down certain tariffs issued under the International Emergency Economic Powers Act (IEEPA) and issued an injunction. The Federal Circuit stayed that order, keeping duties in place pending appeal. The eventual ruling could have major implications for the durability of the current tariff framework. The Aug. 11 extension prevents an immediate spike in China rates, keeping them steady into the heart of the holiday build. A 25% surcharge will stack with the universal rate to reach 50%, with limited exemptions for goods already in transit. Retail And Consumer Tariff Impact Holiday Sourcing Tilts Back To China With China rates frozen until November, retailers can land late October and early November goods under current terms. The India increase narrows its price advantage just as final holiday orders are locked, pushing some sourcing back toward China, reversing years of 'China-plus-one' diversification. Several India-based suppliers report that orders placed earlier in the summer have already been canceled or redirected to Chinese factories in the days following the tariff extension. For retailers, these shifts are landing at a critical point in the production cycle, when manufacturing lead times for peak Q4 goods are already tight. Toy Aisles Tell The Story China supplies the majority of U.S. toys, and the sector has warned of higher prices and leaner assortments this year. President Trump's remark earlier in 2025 that 'maybe the children will have two dolls instead of 30' became a flashpoint, illustrating how policy debates can spill into consumer sentiment. While politically charged, it underscored a real dynamic: retailers may protect key toy price points by trimming accessories, narrowing SKUs or delaying less popular lines. Metals Ripple Into Durables Higher steel, aluminum and copper costs will filter through to lighting, small appliances, HVAC and electrical goods gradually, as contracts reset. Seasonal items like grills and heaters may see quicker increases as retailers decide whether to absorb costs or pass them on. Shelf-Price Strategy The Yale model's 1.8% price impact aligns with retail plans: selective increases in metal-heavy and electronics-adjacent categories, balanced by deeper promotions and expanded private-label offerings to keep key price points stable. Macro Risks Into 2026 Yale's model, published prior to the late-August tariff escalation on India, estimated that current policies could trim real GDP growth by 0.5 percentage point in both 2025 and 2026 and raise unemployment by 0.3 percentage point this year and 0.7 point by the end of 2026. With India now facing a 50% duty on many exports, the inflationary and growth impacts may be higher than originally projected, particularly in categories where India has been gaining share from China such as textiles, footwear, and commodities. If the China pause lapses in November, costs for spring 2026 receipts could spike during the Lunar New Year production cycle. If it holds, a gradual 'China-plus-one' sourcing strategy is still likely to accelerate without displacing China entirely. The Retail Tariff Playbook Pull forward Q4 orders under current China rates and use multiple ports to reduce congestion risk. Reduce copper and aluminum content, re-specify components and pre-buy trims ahead of India's Aug. 27 increase. Hold the line on key value items while recovering margin on higher-cost SKUs. Review tariff-sharing terms and ensure product classifications are current. Prepare for both renewed China hikes and a continued truce. How Tariffs Could Impact The Holiday Shopping Season Tariffs have become a standing policy tool rather than a temporary bargaining chip. The next flashpoint comes in early November, when the China tariff extension expires. If duties rise, in the middle of peak shipping for early 2026 goods, the industry could see a bifurcated supply chain strategy: heavy reliance on China for holiday 2025, paired with a rapid pivot elsewhere for early 2026 replenishment. Between now and then, retailers must navigate a policy environment where trade announcements can swing sourcing math overnight. The winners will be those that can adapt quickly, negotiate strategically, and forecast beyond the next policy headline.

The United States imposes 15% 'reciprocal' tariff on most Japanese goods

Japan Times

07-08-2025

Business
Japan Times

The United States imposes 15% 'reciprocal' tariff on most Japanese goods

A 15% 'reciprocal' tariff is now in effect on most Japanese goods entering the United States, following a shaky 11th-hour compromise reached two weeks ago to avoid the worst-case scenario. The new rate kicks in as the two countries remain at loggerheads over Japan's $550 billion investment pledge made as a part of the trade deal, when and if auto tariffs will be lowered, and even the terms and conditions of the reciprocal tariff. Some analysts wonder if the agreement could collapse altogether. The new reciprocal rate on Japanese goods — which is lower than the 25% that the U.S. threatened to impose but still five percentage points higher than the 10% in place since April — might be charged in addition to the existing duties, contrary to Japan's interpretation of the agreement. U.S. President Donald Trump signed an executive order to modify the reciprocal tariff rates on over 60 countries and territories on July 31, with Syria getting hit with the highest rate — 41% — and a number of countries, including the United Kingdom, having the rate set at 10%, the lowest on the list. About half of the jurisdictions listed received a 15% rate. The new rates took effect at 12:01 a.m. Thursday in Washington, 1:01 p.m. in Tokyo. "IT'S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!" Trump wrote on Truth Social. Discrepancies on how to implement the agreement — which was not put in writing — leaves some of the tariff measures still unclear. Japan insists it secured a U.S. commitment that, for items with an existing tariff rate below 15%, the total duty including the reciprocal tariff will be capped at 15%. For items with an existing tariff above 15%, no additional tariff will be imposed. That promise was absent from an executive order signed by the president on July 31, which shows only the European Union enjoying this more favorable calculation. White House officials confirmed to Japanese media on Wednesday that the Japanese rate will be determined as published and not by using the EU method that caps some rates at 15%. 'We have confirmed with the U.S. side that there are no discrepancies between Japan and the United States,' Chief Cabinet Secretary Yoshimasa Hayashi said of the new reciprocal tariff rate at a news conference in Tokyo on Thursday morning. Also under the terms of the July 22 handshake agreement, Trump's tariffs on automobiles are to be cut in half from 25%, with the new total being 15% when a 2.5% levy independent of the Trump tariffs is included. The White House has yet to announce when it will lower the duties on automobiles from the current 25%, and this has led to considerable concern in Tokyo. Ryosei Akazawa, Japan's chief negotiator, flew to the U.S. on Tuesday for a ninth round of trade talks. He urged the U.S. administration to promptly lower the auto tariffs during a 90-minute meeting with U.S. Commerce Secretary Howard Lutnick. Regarding the contradictory stances on how to implement the new reciprocal tariff, Akazawa told reporters before departing from Tokyo that the two sides share the understanding that the new rate on Japan is 'non-stacking,' in that the 15% won't just be added to existing rates. The difference might be due to a clerical error and might not warrant further negotiations, he said. The U.S. president has said in recent days that he will put new tariffs on a variety of foreign goods, including up to 250% on pharmaceutical products and 100% on semiconductors. A 50% duty on some copper products was put in place on Aug. 1. Currently, Trump tariffs on Japan include a 25% duty on its vehicles and auto parts, 50% on steel and aluminum, and 15% reciprocal tariff on most of its other products.

Trump says Aug 1 tariff deadline will not be extended

Yahoo

30-07-2025

Business
Yahoo

Trump says Aug 1 tariff deadline will not be extended

WASHINGTON (Reuters) -U.S. President Donald Trump on Wednesday said his reciprocal tariff deadline for remaining trade partners will not be extended this Friday. "The August first deadline is the August first deadline - it stands strong, and will not be extended. A big day for America!!!" Trump wrote on his social media platform in all capital letters. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Bloomberg

24-07-2025

Business
Bloomberg

Bloomberg Daybreak: Trump Tariff Rates

1) US President Donald Trump suggested that he would not go below 15% as he sets so-called reciprocal tariff rates ahead of an Aug. 1 deadline, an indication that the floor for the increased levies was rising. 2) Donald Trump will personally visit the Federal Reserve Thursday to tour a construction site he's criticized for cost overruns amid his escalating attacks on Fed Chair Jerome Powell for not cutting rates. The White House announced the visit in the release of the president's daily public schedule. The visit is planned for 4 p.m. reading simply, 'THE PRESIDENT visits The Federal Reserve,' without further details. 3) Elon Musk warned of difficult times ahead for Tesla Inc. after one of the automaker's worst quarters in over a decade. Tesla will be a transition period for the next year or more, losing electric vehicle incentives in the US and needing time to roll out autonomous vehicles, the chief executive officer said.

Trump Says Tariffs to Range From 15% to 50%