• 278 days Will The ECB Continue To Hike Rates?
  • 278 days Forbes: Aramco Remains Largest Company In The Middle East
  • 280 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 680 days Could Crypto Overtake Traditional Investment?
  • 685 days Americans Still Quitting Jobs At Record Pace
  • 687 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 690 days Is The Dollar Too Strong?
  • 690 days Big Tech Disappoints Investors on Earnings Calls
  • 691 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 693 days China Is Quietly Trying To Distance Itself From Russia
  • 693 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 697 days Crypto Investors Won Big In 2021
  • 697 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 698 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 700 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 701 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 704 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 705 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 705 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 707 days Are NFTs About To Take Over Gaming?
Charles Benavidez

Charles Benavidez

Staff Writer, Safehaven.com

Charles Benavidez is a writer and editor for Safehaven.com. Charles is located in New York City and has over 5 years of experiencing covering financial…

Contact Author

  1. Home
  2. Markets
  3. Economy

U.S. Consumers Hit Hard By Tariff War

China US

While the world waits for shipping data on $216 billion in Chinese goods subject to U.S. tariffs, data from the first round $34-billion round of tariffs that went into effect in July shows that imports of Chinese goods to the U.S. have dropped 21 percent, year-over-year.

Before that, we saw Chinese steel and aluminum exports to the U.S. fall 53 percent from March last year to March this year, according to the Ocean Trade Database, cited by CNBC.

As Seabury puts it, we could end up seeing a lot more washing machine stories.

It was the washing machine that started the trade war in late January this year.

From February to May this year, the price of washing machines for U.S. consumers jumped 16.4 percent in the biggest three-month increase in appliance history.

By January, almost everything that originates in China could be 25 percent more expensive, and U.S. companies are already feeling the heat as they foot the bill for the trade war and pass it onto consumers.

According to the ‘Beige Book’ of bank concerns by the Federal Reserve, not only is it making things for expensive for U.S. companies, but retaliatory tariffs are making it harder for businesses to sell goods for export. Exacerbating things, when tariffs were first announced, businesses went on a buying spree to get goods before tariffs went into effect. Now there’s a supply buildup for some items that are making prices lower and netting companies less for products.  

According to the Philadelphia Fed, some first “reported difficulty meeting the prices of foreign competitors who are not exposed to tariffs on the primary input commodities of their products”. Related: Yahoo’s 3.5 Billion Person Data Breach Ends In $50M Settlement

The Dallas Fed noted that “among manufacturers, roughly 60 percent of contacts said the tariffs announced and/or implemented this year have resulted in increased input costs. The share was even higher among retailers, at 70 percent.”

According to Friday’s third-quarter GDP results, the U.S. economy grew at an annualized rate of 3.5 percent, with the trade war dragging GDP growth down by 1.78 points.

It would have been worse if there hadn’t been another surge in inventories as companies once again moved to stock up on pre-tariff items ahead of the implementation of more tariffs. That inventory surge helped by adding 2.09 percentage points to GDP growth, as reported by Business Insider.

The publication cited JPMorgan economist Michael Feroli as saying that “this may have reflected front-loading of imports ahead of scheduled tariff increases – imports which then end up temporarily in stockpiles”.

Last week, Capterpillar said tariffs were increasing its costs and eating into profit expectations, The Washington Post reported.

Earlier in October, Ford said tariffs on metals took around $1 billion in profit from the company, which had sourced most of it domestically.

Tesla said in its earnings report last week that tariffs on Chinese parts could cost it $50 million just in the fourth quarter. 

3M also said it expected tariffs to have a negative impact on total sourcing cost in 2019, with its CFO estimating that the company will have an “approximately $100 million headwind from tariffs”. 

Trump is set to meet Chinese President Xi Jinping in November at the G20 summit in Argentina, and while some are hopeful that this meeting will lead to positive negotiations amid the intensifying rhetoric, even if Trump decides to deal, Beijing may not take the bait.

Analysts told Bloomberg last week that the China’s global dominance of the supply chain may enable it to ride this out without further negotiations.

By Charles Benavidez for Safehaven.com

More Top Reads From Safehaven.com

Back to homepage

Leave a comment
  • Lazlo Toth on November 10 2018 said:
    Funny how one never hears the term short money system. This perfectly describes our monetary system where the money is founded in debt, loaned into existence. There is never enough money to repay the loan with interest. More fiat money must be created, at interest, to repay the original loan and its associated interest. Accordingly, there is always a shortage of money, forcing the bankers victims, the workers, farmers, and peasant soldiers to continually longer hours and harder labor in the capitalists factories, mines and utilities. Not good for the people.

Leave a comment