This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
Retailers rely on complex global supply chains to ensure customers have access to the products they desire at the best possible prices. The ability to access quality, responsibly sourced goods that reach customers by way of an efficient and predictable supply chain is the goal of every retailer.
Today, the US economy — and by extension the business community — is enjoying record growth, built on a confident and empowered consumer. Retailers are investing more in their stores, employees, and their communities.
However, the one thing that can shatter consumer confidence and ground this economic high is a costly trade war with China. The tariffs imposed on Chinese goods, on everything from electronics, school supplies, and clothing, are intended to compel fair trade practices from China, but amount to nothing more than a tax that American businesses and consumers pay.
Applying tariffs to products imported from China immediately increases the cost of impacted goods. Global supply chains take decades for retailers to build, are well-established and are not easily moved. Other markets don’t suddenly develop the skills or the capacity to replace the volume. So retailers and customers are captive to the existing supply chains, where there are few options other than paying the additional tariffs.
The tariff strategy has failed. More than a year and a half later, China has not changed its practices, and products entirely unrelated to the administration’s Section 301 investigation continue to be taxed. The Retail Industry Leaders Association (RILA) supports holding China accountable for violating trade rules, but we do not believe tariffs are the vehicle by which that goal is achieved.
Entering 2020, RILA will continue working aggressively to publicly highlight the negative impact of tariffs to increase pressure on the administration to reach a trade agreement with China.