U.S. Consumers at the Mall Won't Be Able to Avoid Trade War Hit

(Bloomberg) -- The average American consumer is finally getting pulled into the trade war.

The proposed list of additional tariffs on about $300 billion of Chinese goods, released late Monday, is full of the kinds of finished products that fill most U.S. closets and drawers. The items set to get new duties of as high as 25% include more than two dozen pages of clothing items alone, in addition to hundreds of other homegoods, sporting goods, children’s toys and crafting products that are a staple in most American homes.

“This is a self-inflicted wound that will be catastrophic for the nation’s economy,” Rick Helfenbein, chief executive officer of the American Apparel & Footwear Association, said in a statement. “By tightening the noose and pulling more consumer items into the trade war, the president has shown that he is not concerned with raising taxes on American families, or threatening millions of American jobs that are dependent on global value chains.”

The average U.S. consumer had largely escaped direct impact from U.S. tariffs on Chinese imports, with the previous rounds focusing more on agricultural items like fish and produce as the Trump administration tried to avoid the backlash that taxing consumer goods might bring. Some consumer-facing products didn’t avoid the first rounds, from handbags to furniture, but finished apparel was largely left off the list -- until now.

The list of 3,805 tariff subheadings, which still needs to go through public comment, spans everything from winter coats to pajamas to baby clothes, with even niche apparel categories like bowties and skisuits on the list. Outside of clothes, items like cell phones, school supplies, coloring books and jewelry are also set for duties.

It’s not yet clear what percentage of the tariffs will be passed onto consumers, since most companies are unlikely to swallow the higher costs in full. The AAFA estimates a U.S. family of four could pay an additional $500 per year to cover the cost of this new round of tariffs.

China is the top supplier of these items to the U.S., by far. In 2017, it accounted for about 41% of all apparel and 72% of all footwear imported into the U.S., the AAFA said. Some retailers may rush to import orders ahead of time to get ahead of the tariffs, which would lead to higher inventories on the ground.

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