Sources: President OKs China tariffs

$200B in goods to face 25% duties

President Donald Trump, fed up with a U.S. trade deficit with China that reached a record $376 billion last year, has instructed aides to move forward with 25 percent tariffs on $200 billion worth of imported Chinese goods, Bloomberg News reported Friday.

However, the announcement was delayed as administration officials consider revisions based on complaints by industry and the public.

Trump's threat to ramp up tariffs on Chinese imports takes direct aim at American consumers, who face the prospect of higher prices for thousands of Chinese goods from frozen fish sticks to vacuum cleaners.

Shoppers could start seeing price increases on perishable Chinese food imports, including seafood, within days of implementation. Other prices might take longer to react, if they do at all.

The list of goods currently includes can openers, pizza cutters, ice cream scoops and other basic housewares that Bradshaw Home Inc. in Rancho Cucamonga, Calif., imports from China and sells to retailers nationwide, and prices for those products would head higher, said Brett Bradshaw, co-president of Bradshaw Home.

"We will be forced to pass along the higher costs" because "there is no extra margin to absorb such an increase" in the tariffs, Bradshaw said in an email. "We believe our retail partners will, in turn, be forced to pass along the increase to consumers."

A wide array of consumer electronics would be hit, too. Apple Inc. said in a Sept. 5 letter to the U.S. trade representative that the tariffs would be levied on its Apple Watch, AirPod wireless headphones, chargers and certain other products, and that the result would be "higher prices for U.S. consumers."

Trump met with his top trade advisers on Thursday to discuss the China tariffs, including Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer, according to four people familiar with the matter. Mnuchin has led a recent overture to the Chinese to re-start trade talks.

Trump was asked during the meeting whether he was concerned about the impact of the new tariffs on negotiations with China. He responded that he wasn't, two of the people said.

The public comment period for a list of tariffs on about $200 billion in Chinese goods closed last week, and Trump said the duties would be imposed "soon."

The tariffs, which effectively are a tax, would come on top of initial tariffs the United States already plans to charge on $50 billion of Chinese imports, mostly steel, aluminum and other products that directly affected manufacturers more than consumers. The Chinese matched those tariffs on U.S. goods.

But the tariffs on $200 billion of Chinese products listed by the Office of the U.S. Trade Representative would apply to a wide array of consumer goods imported from China, including baseball gloves, tires, handbags, plywood, carpet, oil filters, drawing paper, fabrics and shoelaces, to name a few.

Trump said this month that unless the two nations reconcile on trade policy, he's also ready to more than double the amount of Chinese goods subject to new tariffs. "I hate to do this, but behind that there is another $267 billion ready to go on short notice if I want," he told reporters on Air Force One.

It would be up to retailers to decide whether, or how soon, to pass along the tariffs to consumers.

Grocery shoppers could see higher prices for perishable Chinese food imports within a matter of days or weeks because those goods quickly work their way through the stores' supply chains, analysts said.

Otherwise, while the analysts don't expect retailers of many other Chinese goods to raise prices immediately to help offset the tariffs, they warned that prices could rise just as shoppers are about to spend heavily during the holidays.

"It's not going to happen today, but by the holiday shopping season they'll see it," Stephen Cheung, president of World Trade Center Los Angeles, which promotes trade and foreign investment in the region, said of higher prices.

On the plus side for consumers: Finished computers, smartphones and flat-panel TVs are not among the 6,031 Chinese items Trump wants to hit with tariffs next. But many other consumer electronics are on the list.

The Consumer Technology Association, a trade group for electronics suppliers, warned last month that "American shoppers will have to pay between $1.6 billion and $3.2 billion more for connected devices such as gateways, modems, routers, smart speakers, smartwatches or other Bluetooth-enabled products" due to the tariffs.

How much more consumers pay for electronics, and how soon, could depend in large part on e-commerce giant Amazon.com Inc., whose prices are matched by Best Buy Co. and some other rivals. Amazon declined to comment on its pricing, and Best Buy referred inquiries to the Consumer Technology Association's statements.

Whether consumers quickly see higher prices on any of the thousands of Chinese imports "depends on what the importer is going to do," and that can vary depending on how much inventory from China it buys before the tariffs take effect, said Jock O'Connell, Beacon Economics' international trade adviser.

But Cheung said most retailers try to keep inventories to a minimum and eventually "they're going to pass [the tariffs] on to consumers."

Higher prices would test the recent increase in U.S. consumer confidence -- which last month stood at its highest level in 18 years, according to the Conference Board -- and recent monthly gains in consumer spending.

"This is coming at a very sensitive time" with the holiday season ahead, Cheung said. "In addition, our economy -- especially in Los Angeles and in California overall, because of our dependence on international trade -- would be one of the areas really hit the most" by the added tariffs, he said.

Several California-based firms that buy products from China, including Bradshaw Home, already had joined with companies nationwide in warning the Trump administration that the added tariffs would mean higher prices for shoppers.

In Bradshaw Home's case, there "are no alternative sources for the supply of these products," Bradshaw said at a trade representative hearing in Washington on Aug. 21.

He also said that raising prices due to the tariffs would "have a disparate impact on lower-income households that rely on our products ... to clean their homes and safely cook their food."

Information for this article was contributed by James F. Peltz of the Los Angeles Times and by Jennifer Jacobs, Saleha Mohsin and Jenny Leonard of Bloomberg News.

A Section on 09/15/2018

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