That’s nothing compared to what we’re about to witness across consumer prices in the United States very soon. One reason is the new tariffs being levied against imported goods, particularly on computer and electronic products. In June, consumers experienced a drop in prices, up 4.9% from a year ago, on computers. As tariffs continue to climb, even steeper price increases are coming. Toys, electronics, luxury goods including shoes and watches all would stand a serious risk. This state of affairs should be alarming to American consumers and businesses alike.
Key Imports and Their Origins
Computers consistently rank as one of the top US imports, with large shipments starting in individual countries. China continues to be one of the most significant players, exporting nearly 1 trillion dollars in computers and electronics. Other major suppliers are Mexico, Taiwan, Vietnam, and Malaysia. India has become an important supplier of computers and electronic goods to the U.S. market too.
Together, these countries make up an incredibly strong electronics supply chain, one in which shipments can pass through with little to no added tariff. Products from China now have to contend with a bare minimum tariff of 30%. In a few months, imports from India will face the same minimum 25% tariff. Simple math shows that this increase in tariffs will add considerable costs to consumers. Suppliers will be forced to change their pricing practices to deal with these new cost shifts.
Economic Consequences of Tariff Increases
For instance, economists are anticipating that the increased tariffs will impose substantial costs on top-ten consumer goods category. Computers are only one sector where prices have already begun to increase, other fields are sure to follow suit. Computer prices are going up, largely due to inflation as well. This positive trend makes the case for the harmful economic impact of raising tariffs on imported consumer goods all-too-real.
To make matters worse, toys imported from China and Vietnam are now subject to a new tariff structure. Both countries have been heavily criticized for the amount of toys they produce and ship to the United States. In the same vein, shoes produced in China, Vietnam and Indonesia will be subject to tariffs beginning at least 19%. The potential impact on consumers is significant—particularly around high-volume shopping holidays.
Luxury Goods Under Pressure
In the luxury goods sector, wristwatches imported from Switzerland stand out as one of the top exports to the United States. These watches are now scheduled to be greeted with a whopping 39% “reciprocal” tariff—which will surely raise prices by an amount sure to stun. The market for leather products, from fashion accessories to luxury watches, is set for major hikes in prices. Look for an increase of 39.7% in the near term and 18.9% over the long haul.
The effect of these tariffs goes far beyond consumer electronics and luxury imports. Last year, watches had an import value of more than $4 billion. These tariffs would radically shift consumer choices and preference across demographic lines.
Trade Relations and Future Implications
Congratulations @RepDNegrete #MexicanTradeDeal #strikeone Goods imported from Mexico can be shipped duty free when they satisfy certain international trade deal standards. The dire picture cast for U.S. imports is shifting dramatically due to the imposition of these new tariffs. China, Vietnam and especially India are running into a ceiling of increasingly erected tariffs on their exports. Consequently, American consumers should get ready for continued price increases on everything from toilet paper to televisions.