Paying A Steeper Price For Tariffs

We’re approaching the midway point of a year that started with so much forward momentum. But after the uneven retail sales results released the past few weeks, uneasiness is setting in as the housewares business speeds toward the second half.

This is why the increase in tariffs to 25% on a wide range of Chinese goods as the back-half shipping season heats up is such an urgent issue aggravating the many mounting challenges faced by the housewares business.

Mitigate Exposure

If the U.S./China trade standoff continues, housewares importers, retailers and consumers could be hit hard during the second half. Several housewares vendors risked bringing in more product earlier than preferred to get ahead of the then-looming tariff increase. And many retailers, despite continuing efforts to stonewall vendors on price increases, have been left with little choice but to take some increases with the intention of passing them to consumers.

If efforts by vendors and retailers to mitigate tariff exposure restricts back-half inventories and leads to early out-of-stocks, that could further constrain holiday sales potential already compromised by price increases.

There is irony in that punitive tariffs intended to protect U.S. producers have backfired on some of those producers. Can someone explain, for instance, how finished portable fans from China are not yet subject to tariffs, but domestic manufacturers of portable fans are hit with a tariff on imported motors they need?

Limited Options

Domestic makers of cookware and bakeware facing material shortages and opportunistic price increases from U.S. steel and aluminum producers received relief last month when tariffs were lifted on steel and aluminum from Canada and Mexico. All Mexican imports to the U.S. have since been targeted suddenly and surprisingly with a potentially escalating 5% tariff set to start June 10 in a move by the White House to pressure Mexico on illegal immigration.

American-made options don’t readily exist for most housewares imports swept up in the recent wave of punitive tariffs. And few U.S. stakeholders are sheltered from the impact of tariff escalation as the all-important second-half retail push approaches.

With the threat of more tariffs to come covering nearly all Chinese imports, everyone is searching for answers to soothe the agita caused by sweeping policy that, despite a genuine need to curb unfair practices by China and other trading partners, still seems impulsive and excessive to many.

Burden Of Compromise

The near-term burden of compromise, fair or not, falls on vendors and retailers to diffuse the impact of tariffs as much as possible before goods reach the shelves… or risk paying a steeper price in the long run.