The U.S. retail trade's core concerns about President Trump's protectionist impulses became reality today as Trump imposed $50 billion to $60 billion of annual tariffs on about 1,300 lines of Chinese imports that will include goods Americans buy every day that are the bread and butter of many retailers' businesses.
The tariffs, which the Office of the U.S. Trade Representative will publish within 15 days, are designed to punish China for its alleged thefts of intellectual property and technology. The administration will also direct the Treasury Department to restrict Chinese investment in U.S. technology companies to retaliate against practices used by China to build a presence in fast-growing high-tech fields.
It took little time for the nation's two largest retailer trade groups to issue strong protests, arguing that it will not be China that pays, but the American consumer, through higher retail prices.
"Retailers fully support holding our trading partners accountable when there is a proven case of intellectual property theft. But the punishment should fit the crime, and more importantly, it should punish the bad actor—China," said Hun Quach, vice president of international trade for the Retail Industry Leaders Association (RILA). Imposing widespread tariffs on everyday consumer products means American consumers "will pay more at the checkout for the items they shop for every day," Quach said.
The National Retail Federation (NRF) said the tariffs will "create uncertainty for retailers and other businesses" that are poised to re-invest proceeds from the recently signed tax reform law in capital investments, workforce training, and worker wage increases.
Given China's influence on American consumption patterns, the tariffs' impact could be significant. More than 41 percent of clothing, 72 percent of footwear, and 84 percent of travel goods sold in the U.S. are made in China, according to the groups.
Both groups urged the White House to reconsider today's move, and to instead target trade sanctions at areas where violations have been clearly demonstrated. They have stopped short of saying they will lobby Congress to intervene.
By law, Congress has the power to set tariffs, but the president can impose them if Congress gives him the authority to do so. Congress can strip Trump of the authority if it so desires. For example, the White House indicated earlier this month it would consider measures against China under section 301 of the Trade Act of 1974, which gives the president unilateral and discretionary power to force another country to end a policy or practice which violates international trade agreements or burdens U.S. commerce.
U.S. financial markets took today's events poorly, with all major indexes reporting major declines. The Standard & Poor's 500 index fell more than 2.5 percent, while the 30-stock Dow Jones industrial average declined nearly 3 percent.