Heading for bad times
It seemed accidental when Mr. Trump admitted that American consumers, not the Chinese, pay the tariffs he has imposed on imports to our country. For months he claimed, especially at his enthusiastic but often fact-free rallies, that his tariffs were filling the American Treasury with revenues drained directly from China’s coffers.
But then he remarked offhand that he’d like to delay the next round of the trade war until after the Christmas shopping season. Why? If Americans buy lots of imported gifts, won’t that just funnel more money from those dastardly Asians to our government? So much winning!
The secret is out. We are the ones paying for tariffs on imports. This stands to reason: when American importers face higher costs, they must pass them along to customers in order to stay out of hock. The only purpose in waiting till after Christmas was Trump’s hope that his false narrative might not become such an obvious lie to average Americans.
That’s because the goods subject to previous rounds of tariffs were mostly components or materials passing through layers of production and wholesaling before reaching individual buyers. American manufacturers and middlemen could take a few hits to cushion end consumers. But after some confusing back-and-forth — did high-level phone calls to China really take place? Is the latest round on or off? — new tariffs imposed in early September leave no cushion.
Consumer goods, including many that place high on Christmas lists, will soon be subject to a 15% tariff. This means sneakers, toys, clothing, electronics, dishware, and furniture.
A group of British economists calculated the cost to American households, over one year, of tariffs expected to be in place by the end of 2019. The range runs from $340 for the poorest families up to $970 for those with greater disposable incomes. Another study found that existing tariffs are already costing the average household $250 annually.
Since a fragile component known as “consumer confidence” is keeping our economy afloat, the blow of rising prices could be even harder to absorb. As prices go up, people naturally economize. But market watchers warn that could be the pinprick to trigger a recession across the economy. If your retirement fund depends on the stock market, you know what recent volatility has meant for the bottom line.
Connecting the dots shows us running straight into another ditch.