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Retailers

China Tariff Increase Raises Alarm Across Grocery Industry

Major concerns include higher prices on goods, job loss
Photograph: Shutterstock

President Trump increased tariffs on $200 billion of Chinese goods from 10% to 25% Friday, raising concern across the grocery industry of higher costs being passed on to consumers and potential job losses.

News of the tariff increase was revealed via a tweet from Trump only five days before going into effect. Trump added that he would soon expand the 25% tariffs to $325 billion in goods that are currently untaxed while also griping about the trade deal with China going “too slowly” and China attempting to renegotiate. Trump said added that there was “absolutely no rush” to finalize a trade deal.

On Friday, Trump tweeted that talks with China were going “in a very congenial manner” but the tariffs would still be imposed, holding that the U.S. bleeds $500 billion per year in trade with China. He posited that the tariffs will bring in wealth and help farmers, adding “build your products in the United States, and there are no tariffs.”

According to a report from the New York Times, economists and business owners predict that stores that are already passing the higher costs on to consumers will do so at a higher rate and stores that have tried to shield shoppers from the higher costs will no longer be able to do so.

The grocery industry spoke out against the tariffs, with David French, SVP of government relations for the Washington, D.C.-based National Retail Federation (NRF), stating that “tariffs are taxes paid by American businesses and consumers, not by China.”

At the time the tariff increase was first announced, French warned that such a move made “with less than a week’s notice” would “severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact” adding that American consumers would face higher prices and job loss.

According to a report from Trade Partnership, tariffs would reduce U.S. employment by over 934,000 jobs, cost the average family of four $767 and reduce U.S. gross domestic profit by 0.37%.

French urged that the grocery industry does want to see “meaningful changes” in China’s trade practices, the issues of which supposedly triggered the trade war in the first place, but it “makes no sense to punish Americans as a negotiating tactic.” As an alternative, he suggested that the U.S. form a multinational coalition with allies who share the same concern to put pressure on China.

NRF’s Global Port Tracker imports at the nation’s major retail container ports are expected to see unusually high traffic through the summer, which Jonathan Gold,  VP for supply chain and customs policy for NRF, said is driven by consumer demand but also retailers scrambling to order stock before the tariffs take effect.

The American Bakers Association (ABA) also spoke out with its main concerns, including tariffs on steel used for baking equipment and dry goods.

“While we support the tax cuts and overall deregulatory agenda of the administration, these ongoing tariff battles put the industry at a significant disadvantage and jeopardizes our potential for economic growth,” the ABA said in a statement.

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