Brace for higher prices for iPhones, shoes and more if tariffs kick in
- Some 3,800 products the U.S. imports from China, worth a total of more than $300 billion, could soon face tariffs of 25%.
- The items include a range of common consumer goods, including iPhones, TVs, clothes and toys.
- A family of four in the U.S. could face $2,300 per year in additional costs due to the pending tariffs, which could kick in as early as next month.
With the Trump administration preparing to levy fresh tariffs on an additional $300 billion in Chinese goods, American consumers could soon feel feel the impact on their pocketbooks. Many of the 3,805 products that could get hit by the next round of tariffs represent everyday consumer items like smartphones and shoes.
Analysts say they expect the tariffs, which could take effect as early as late June barring a trade deal with China, to slow U.S. economic growth by hiking costs to consumers, who are likely to cut back on purchases or shift to products manufactured outside China. Earlier rounds of tariffs had avoided import duties on common consumer items made in China, insulating American households from much of the impact of the festering trade dispute between the world's two biggest economies.
President Donald Trump says consumers can avoid getting hit by tariffs if they "buy from a non-Tariffed country instead of China." Yet that ignores the reality of modern manufacturing. Today, many products are almost entirely made in China or assembled there, such as iPhones, and then exported to the U.S.. Often, there are few alternatives for American consumers eager to buy non-Chinese goods.
The retail industry predicts a severe impact on consumers and companies, adding $2,300 in annual costs for a family of four. "Slapping tariffs on everything U.S. companies import from China – goods that support U.S. manufacturing and provide consumers with affordable products – will jeopardize American jobs and increase costs for consumers," said Matthew Shay, CEO of the National Retail Federation, in a statement.
The expanded tariffs would cover essentially all remaining Chinese imports not already taxed when they enter the U.S., and follow the Trump administration's move on Friday to hike duties on $200 billion worth of Chinese imports from 10% to 25%.
From iPhones to t-shirts
The thousands of products that could face higher tariffs encompass a vast array of consumer goods. Yet the biggest impact may be on smartphones like Apple's iPhone, which so far have escaped the volleys of U.S. tariffs and Chinese countermeasures.
Apple would need to boost its iPhone prices by 14 percent to offset the impact of a 25 percent tariff, according to J.P. Morgan. That would raise the cost of an iPhone XS from $1,000 to $1,142, potentially slowing sales if consumers decide to hold off on upgrading to a new phone due to the higher costs. Apple's profitability would also be hit by the import duties -- Bank of America predicts a 9 percent drop in the tech giant's per-share earnings if the tariffs go through.
The expanded list of Chinese goods targeted by the U.S. "covers essentially all products" not already affected by punitive tariffs, although it excludes pharmaceuticals and rare-earths minerals used in electronics and batteries, the Office of the U.S. Trade Representative said. China is the biggest exporter to the U.S. of some goods on the list, like leather ski gloves, which means U.S. consumers may find few non-Chinese alternatives. About 85 percent of leather ski gloves imported to the U.S. are made in China, according to Bloomberg.
Other commonly used household products on the list of 3,805 products include:
- Laptop computers
- Television sets
- Cameras
- Sunglasses
- A wide range of apparel, such as t-shirts, coats, pants
- Bed and table linens
- Shoes
- Tableware like dishes and glasses
- Toys (for both children and pets)