September 20, 2018

THE TAX HIKINGEST ADMINISTRATION EVER:

Walmart is where the trade war comes home (Nathaniel Meyersohn, 9/19/18, CNNMoney)

Other retailers and consumer goods companies, including Ace Hardware and Joann fabric and craft stores, also lobbied the administration.

Target (TGT) said the tariffs will "hurt American consumers," and said working families will pay more for school and college essentials like notebooks, calculators, binders and desks.

The administration did not bend to the company's plea. It imposed tariffs on those goods -- although it did spare bicycle helmets, high chairs, car seats and playpens from the final list. It also left off Apple Watches and Air Pods, a reprieve for Apple.

Target and Walmart will now face a tough choice: They can absorb the higher costs from tariffs by taking a hit to their profit margins, or they can pass some of the price increases on to their customers.

"Either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forego purchases altogether," Walmart warned in its letter.

The National Retail Federation, a trade group, estimated that a 25% tariff on furniture would cost Americans $4.5 billion more per year, while a 25% levy on travel items like luggage and handbags would cost an additional $1.2 billion.

Washing machines were an early example of how tariffs filter down to shoppers. The Trump administration imposed a 20% trade penalty on washers earlier this year, and laundry equipment prices spiked close to 20% in recent months, according to the Bureau of Labor Statistics.

Walmart will have to wrestle with the price question in a big way. Of the company's $500 billion in sales last year, about $50 billion was linked to Chinese imports or investments in Chinese businesses, estimated Greg Melich, a retail analyst at MoffettNathanson.

And raising prices is anathema to Walmart, a company that controls 10% of the US retail market and has a customer base of low- and middle-income Americans.

"Given that Walmart was such a huge source of cheap products for low income customers over the years, this really hurts the very people that Trump professes to help," said Sucharita Kodali, a retail analyst for research firm Forrester.

Racism isn't cheap.


Posted by at September 20, 2018 4:17 AM

  

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