How tariffs on China could make your life more expensive

Posted at 5:38 PM, Apr 04, 2018

TVs. Dishwashers. Printers.

Get ready: These are just some of the products that could get more expensive if the United States moves forward with proposed tariffs on $50 billion worth of Chinese products, and companies decide to pass the cost of the new taxes on to customers.

On Tuesday, the Trump administration identified about 1,300 exports from China that could be targeted in the wake of a months-long investigation into intellectual property theft. The lengthy list includes a wide range of items, from airplane parts to syringes.

The 25% tariff, which would be applied to all products, won't go into effect immediately. And the list isn't final. There's still time for businesses to lobby the government to remove certain items, and additional products can still be tacked on.

But the current list would almost certainly lead to higher price tags on consumer electronics and various home appliances — including flat-screen TVs and home dishwashers.

"There's potential this a major hit to the pocketbooks of Americans, based on what we're seeing right now," said Jack Cutts, senior director of business research at the Consumer Technology Association.

The USTR is also weighing tariffs on a number of key components in electronic devices, such as LED lights, copper wire, and capacitors and resistors. It's possible that companies will ask consumers to pay more to make up for higher costs in the supply chain.

"We're down at the basic building blocks of consumer electronics," Cutts said. These parts are included in items from computers to printers to smart refrigerators and coffeemakers, he said.

The USTR list contains a lot of other inputs in final products, like screws, pulleys and motor parts.

Whether prices rise will ultimately depend on the availability of substitutes, said Brad Setser, senior fellow for international economics at the Council on Foreign Relations.

And companies might find ways to skirt the tariffs by making greater use of manufacturing facilities in other countries, like Brazil and Vietnam.

"Simply because it costs Apple that much more doesn't mean the consumer will pay [that much] more," said Awi Federgruen, a Columbia Business School professor who studies supply chain management.

There's no easy way to determine if companies will decide to raise prices — and if so, by how much.

Still, higher prices of any kind could make things tough on stores and shoppers — especially during the upcoming holiday season.

"These tariffs might be Grinch tariffs," said David French, senior vice president of government relations at the National Retail Federation. He noted that retailers will make decisions about where to source what they sell in December in coming weeks.

Right now, companies are combing through their supply chains to see whether they might be impacted.

The USTR list included a lot of general manufacturing equipment, so there could be additional revelations about affected products in the days and weeks to come.

For example, even though clothing, shoes and toys were excluded from the initial list, parts and machinery used to manufacture these items may have been included, which could affect pricing.

There are also lingering concerns that such items may find their way into the final draft.

"Items like apparel and footwear that are not on the list today, may suddenly materialize or appear on a later list," French said.