President Trump’s ‘America First’ approach has relied on slapping tariffs on countries, such as China and Mexico, which have led to current trade wars. What is a tariff and how do they work? We explain.
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It looks like the trade war with China won’t be taking a bite out of your Christmas budget.
The Trump administration said Tuesday that it would wait until Dec. 15 to impose tariffs on Chinese goods that were supposed to go into effect in September. Other items were removed from the tariff list due to health, safety and national security concerns.
Many of the items on the tariff list are popular holiday gifts. That’s a relief to retailers, which would either eat the added costs or pass them onto shoppers – neither a palatable outcome.
It also means Americans won’t see higher, tariff-inflated prices during their holiday shopping. Those who are traditionally last-minute holiday shoppers may want to skip procrastinating this year, though, and wrap up the shopping before the Dec. 15 deadline.
Tariffs are a big problem for companies doing business in China. But they aren’t the only problem. (Photo: Getty Images)
“I think the president wanted to avoid being the Grinch who stole Christmas,” said Mark Zandi, chief economist of Moody’s Analytics. “These delayed tariff hikes would have landed squarely on American consumers.”
What’s affected by the tariff delay
The 21-page list of items subject to the delay includes many common holiday wishlist gifts, like cellphones, laptops, video game consoles, toys, shoes and clothing. With a delayed hike, Americans are poised to save big on some products.
“We’re doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers. So far they’ve had virtually none,” President Donald Trump said in New Jersey before boarding Air Force One for an event in Pennsylvania.
Retail tourists? Why do we Chinese love coming to America? Shhh! It’s the shopping.
Markets on the move! Dow, stocks surge after US delays China tariffs on cellphones, video games computers
For instance, the price of an Apple iPhone would be $75 to $100 higher with the tariffs, Wedbush Securities analyst Daniel Ives estimated recently. That would be bad timing for the company, which is expected to release three new editions of the iPhone in September, models with extra power and improved battery performance.
Another popular holiday gift, video game systems, will also dodge the price uptick until Dec. 15. Earlier this summer, hardware makers Microsoft, Nintendo and Sony asked the Trump administration to remove video game consoles from the list of products to be hit with tariffs.
Their concerns: The import tariff could raise the price of a game system enough to price out 1 in 4 U.S. families this holiday season, the companies said.
Other tariffs coming soon
So far, “consumers had been largely insulated from the price increases from the trade war,” says Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.
The tensions have had other ill side effects, though.
The manufacturing industry is teetering on a recession. U.S. farmers are facing mounting losses. And stocks had their worst rout of the year after Trump this month vowed to enact another 10% tariffs on $300 billion in Chinese goods starting Sept. 1.
That list runs 122 pages and includes items that were not subject to earlier tariffs such as clothes, jewelry, linens, sunglasses, watches, guns, clothing and sports equipment.
That set of tariffs will hit Americans’ pocketbooks, too.
Contributing: USA TODAY business writer Kelly Tyko and Washington correspondent John Fritze.
American businesses are telling the Trump administration that an escalating trade war with China will hurt the U.S. economy. This comes as public hearings are being held to consider extending the 25% tariffs to practically all Chinese imports. (June 17)
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