China retaliates against U.S. in escalating trade war
U.S. President Donald Trump set the world’s two largest economies on course for an all-out trade war, unleashing a list of US$200 billion of Chinese products set for tariffs just as the critical holiday shopping season begins.
A 10 per cent duty will be slapped on everyday items including handbags and furniture to fish and dried fruit starting next Monday and will increase to 25 per cent in 2019. China quickly returned the blow, announcing hours later that it plans to retaliate with levies on US$60 billion worth of U.S. goods. That may open the door to deepen the standoff, with the U.S. president threatening levies on US$267 billion more -- nearly everything else China exports to the U.S. -- if Beijing counterstrikes.
Manufacturers, retailers and business groups have been lobbying for weeks to escape the final list of products set for duties. Here are some winners and losers:
U.S. households, brace yourselves. Trump’s new list of levies covers every corner of the home: soaps and shampoos, hand tools and furniture, leather goods and handbags, refrigerators and vacuum cleaners, and plates and cups, to name a few. Many of the products are staples found in nearly every American household, and are likely to become more expensive. Even the lights on the Christmas tree won’t escape a price hike if they’re made in China.
Retailers from luggage maker Samsonite International SA to handbag seller Steven Madden Ltd. have said they will be forced to raise prices for American buyers. The National Retail Federation warned that tariffs will lead to higher prices and even product shortages.
Pretty much every part of a bicycle, from saddles and spokes to tubes and frames, features on this latest tariffs list, even after the industry went into overdrive to get relief. About 10 per cent of the 6,100 comments the U.S. Trade Representative received during the public consultation period were about bikes. China accounted for nearly all of the 15.4 million bikes the U.S. imported last year, according to Giant Manufacturing Co. It told the USTR that a 25 per cent tariff would cost more than US$250 million, and Americans would “inevitably” foot the bill.
While caviar might be associated with Russia, some of the world’s best comes from China -- leaving lovers of the fish eggs to bemoan its inclusion. It’s served in fancy restaurants across the U.S., including Eric Ripert’s Le Bernardin. Fans of tilapia, mussels, catfish, cod and roe will likely have to fork out more, as well as those who snack on almonds and macadamia nuts. For those needing a fish fix, frozen cod fillets were left off the final list.
Boaters and Yachters
The made-in-China inflatable rubber boats that get puffed up for summer vacations won’t be so cheap anymore. If you prefer a yacht -- like Trump himself -- motorboat, sailboat, or just a canoe, the Chinese variants will probably become pricier, too.
Although the Trump administration has been careful not to tax consumer favorites like Chinese-made iPhones, some other Apple Inc. products were on the USTR’s original US$200 billion list proposed in July. The White House spared the category of products that includes the Apple Watch, according to the U.S. Trade Representative office. The tech giant’s AirPods got a reprieve, too, as did fitness trackers from Fitbit Inc.
Moms and Dads
Trump’s administration excluded big-ticket children’s items including car seats, high chairs and playpens from the final list. Target Corp. and Graco Children’s Products Inc., part of the baby division of Carl Icahn-backed Newell Brands Inc., were among the companies that lobbied against fresh tariffs. Annual revenue for the U.S. durable baby-goods industry is expected to reach US$10.2 billion in 2022, according to IBISWorld.
Anyone in Pain
Got a headache from those higher prices? Find relief knowing the U.S. has at least dropped the painkiller ibuprofen from proposed levies. China is a major supplier of the generic ingredient, which is in short supply for some manufacturers following a technical failure that forced the Texas plant shutdown of producer BASF SE. LNK International Inc., a Hauppauge, New York-based manufacturer of store brands for Walgreens, CVS and Walmart, has no option but to buy from Chinese producers, Chief Executive Officer Joseph Mollica said in a USTR letter.
Medical gloves and bed sheets were scrubbed from Trump’s duty list, a victory for groups such as the Health Industry Distributors Association. Because medical-surgical distributors typically operate on margins of 2 per cent, a big new tariff on health-care products “could potentially cripple these businesses,” according to a letter this month to the USTR from the group and other health-care associations.
Hoarders of Chinese artifacts more than a century old won a reprieve from Trump’s duties. The U.S. imported US$1.81 billion of artwork, antiques, stamps and other memorabilia in 2017, according to the U.S. Census Bureau.
Put the shaver down. Animal bristles from boars, hogs and badgers used by mustache and beard groomers were spared the chop.