Consumer and retail industry representatives are teetering with concern as China responded Wednesday, April 4, to President Donald Trump's latest tariffs with a slate of its own on products such as stainless steel parts, fruit and soybeans, hinting at an impending trade war between the two economic powerhouses.
While the retail companies TheStreet reached out to have remained mostly mum about the potential conflict, industry organizations like the National Retail Federation and the Retail Industry Leaders Association are sounding the alarm, warning that the tariffs will result in higher costs for American consumers starting in the upcoming holiday season.
"Retailers are concerned that American corporations and consumers will be innocent bystanders in a trade war," said NRF's senior vice president for government relations, David French. "This won't be an easy pill to swallow for these companies, when margins are narrow in the first place."
Trump initiated the tariff talk last month by authorizing duties of 25% on imported steel and 10% on imported aluminum. On Tuesday, the U.S. called for more than $50 billion on Chinese imports ranging from furniture to electronics, totaling about 1,300 items. China shot back on Wednesday with its own list of 106 products imported from the U.S., matching the $50 billion in tariffs.
The U.S. policy will be what hurts American consumers, French told TheStreet, while the tariffs proposed Wednesday by Beijing will affect Chinese nationals. The Chinese tariffs could also impact U.S. exporters, such as soybean farmers.
The products that will be most likely impacted for U.S. consumers are electronics such as flat-screen televisions and computers, household appliances and maybe cosmetics made from chemical components on the tariff list. If the tariffs are implemented next month, he added, domestic shoppers can expect to see higher prices by the holiday season — historically the most profitable quarter for retailers.
"We're still scanning the list. The impact is difficult to gauge at this point," French said. "We're concerned across the board, not just with the anticipated tariffs. We don't know where this ends, and we don't know how many more announcements are coming. All of these things will likely slow economic growth and complicate the supply chain to source goods this year and beyond."
That the outcome is hard to predict for U.S. consumers is something agreed to by Joseph J. Minarik, senior vice president and director of research at the Committee for Economic Development. Minarik said three main areas of products potentially impacted are consumer goods, materials and components. "Materials and components that go into U.S. products could have second-, third- and fourth-round implications [potential price hikes] for U.S. consumers," he told TheStreet on Wednesday. "They [tariffs can] create a spider web of effects. We can't anticipate how far that web is going to extend."
The categories on which the Chinese will levy fees include fruit, soybeans, wine and cars.
French's frustration was echoed by the Retail Industry Leaders Association.
"We remain concerned that many of these proposed tariffs will punish American consumers. Tariffs on everyday consumer products will hit American wallets," said Hun Quach, vice president of international trade for RILA, in a prepared statement, urging the Trump administration to reconsider its trade policy.
TheStreet contacted a handful of the largest consumer companies in the U.S., including Walmart Inc. (WMT - Get Report) , Lowe's Companies Inc. (LOW - Get Report) and Target Corp. (TGT - Get Report) . Three responded to the immediate request for comment, including Walmart, which deferred to statements made by RILA.
A spokesperson from Best Buy said in an email statement the company is willing to work with the administration to avoid higher product costs.
"We applaud the administration's desire to ensure that our trade partners are using fair practices," said Best Buy Co. Inc. (BBY - Get Report) . "We look forward to the opportunity to share our thoughts on the proposed list of products and on how to make sure these measures do not inadvertently hurt millions of American families, students, small businesses, and schools by causing them to pay more for the consumer electronics they rely on every day."
"Broadly speaking, if we have vendor requests for price increases, we review those on a case-by-case basis," said the building-supplies company's spokesman Stephen Holmes. "But if we deem a price increase is warranted, that does not necessarily mean we'll increase the retail price of that specific product because we manage our pricing on a portfolio basis."