“`html
WASHINGTON D.C. – august 8, 2024 – New U.S. tariffs on $300 billion of Chinese imports went into effect today, triggering immediate reactions from economists, retailers, and markets. The move, announced by the Biden governance on May 13, 2024, aims to address what the administration calls “unfair trade practices” and bolster domestic manufacturing.
The tariffs, ranging from 7.5% to 50%, target a wide range of products including steel, aluminum, electric vehicles, semiconductors, and consumer goods. The U.S. Trade Representative (USTR) Katherine Tai has stated the tariffs are designed to encourage China to address issues such as intellectual property theft, forced technology transfer, and overcapacity in key industries.
Initial data released Thursday indicates China’s imports rose by 4.1 percent year over year in July, reaching $22.3 billion – the largest increase since July 2024. This defied predictions of a 1 percent decline and followed a 1.1 percent gain in June. Analysts attribute this surge to increased domestic demand within China, fueled by Beijing’s efforts to stimulate consumer spending through initiatives like the “Consumption Boost Plan” launched in April 2024.
The implementation of these tariffs marks a continuation of the trade tensions between the U.S. and China that began escalating under the Trump administration in 2018 with the imposition of Section 301 duties. While the initial round of tariffs saw a critically important portion of the cost absorbed by importers and retailers, experts now predict a greater pass-through to consumers.
J.P. Morgan global market strategist Meera Pandit, in a CNBC interview, estimated that approximately 60 percent of the tariff costs will ultimately be borne by U.S. consumers. Brands and retailers are expected to absorb the remaining 40 percent, impacting both their profitability and potentially leading to price increases. This contrasts with the earlier stages of the trade war, where roughly 40 percent of the tariff costs were passed on to consumers.
J.P. Morgan’s recent report highlights “heating up” inflation concerns. The report notes that while initial tariff costs were buffered by existing inventories built up through “front-loading” – companies importing goods ahead of tariff deadlines – this buffer is diminishing. Analysts predict goods inflation could climb, potentially pushing overall inflation above 3 percent by the end of 2024.
The impact is already being felt in the market. Ralph Lauren, during its quarterly earnings call on Thursday, August 8th, reported consistent consumer trends but expressed a “more cautious” outlook for the second half of the year. CEO Patrice Louvet emphasized the uncertainty surrounding consumer price sensitivity and their reaction to the broader pricing surroundings. Ralph Lauren announced plans to increase prices this fall to offset the tariff impacts.
Following the earnings call, Ralph Lauren’s stock price experienced a 7 percent decline, closing at $132.50 per share on the new York Stock Exchange (NYSE).
The long-term effects of these tariffs remain to be seen. Economists at the Peterson Institute for International Economics (PIIE) have warned that the tariffs could lead to reduced trade volumes, slower economic growth, and increased
