This week is presumably the week we will learn if Trump is going to push the big red button and dramatically escalate his trade war by imposing tariffs on $300 billion in Chinese goods.
If he does that, retailers say average Americans will see their costs increase by at least $12.2 billion each year.
The National Retail Federation (NRF) says that while some companies will be able to source their products from other countries or use other gimmicks to avoid Trump's tariffs, it would be literally impossible for every company to do that.
The tariffs would result in consumers paying another $4.4 billion on apparel, $2.5 billion on footwear, $3.7 billion for toys and $1.6 billion for household appliances, the retail trade group said, based on a study it had commissioned.
“It would be impossible for all market participants in our industry to simultaneously move sourcing to other countries. The capacity does not exist,” David French, NRF’s senior vice president of government relations, said in a statement. “In the short term, retailers would be forced to continue to use Chinese suppliers and pass on higher costs to their customers.” [...]
“The fact remains that for many (fashion brands and retailers), China remains the No. 1 supplier in the world, with no realistic options for other sourcing destinations that could replace China,” [the United States Fashion Industry Association] added.
In hindsight, if we were going to decide that we don't want to use China as a source for cheap goods to support a consumer and service-based economy, the time to do that was nearly 40 years ago before it become a basic pillar of the global economy.
I have no idea what Trump is going to do this week and I doubt anyone does. I doubt Trump himself knows what he's going to do. He may impose tariffs and he may back down and delay his decision for several months just like he did last November. In November of 2018 and as recently as this month when he called off his decision to impose tariffs on Mexican goods, Trump has erroneously declared victory and delayed his own calamitous decisions while achieving nothing new.
In related news, if Trump does impose more tariffs on Chinese goods, that would virtually guarantee that the Federal Reserve will cut interest rates next month.
With all the speculation that a Fed rate cut would juice the economy like a Monster Energy drink, Trump may consider that to be appropriate trade-off. But it wouldn't be unless you're Donald Trump; a man who owes and borrows many millions of dollars. For average Americans who will see the cost of basic household goods increase, a Fed rate cut will mean exactly jack shit.