The day after the elections that will return Donald Trump to the White House, the wife of an executive of a medium-sized company in southwestern Pennsylvania—a hotbed of Republican votes—told on social media that this year they will not receive a Christmas bonus because The company will use the money to supply merchandise equivalent to many months of stocksin anticipation that the president-elect’s threat to impose tariffs on Mexico, Canada and China comes to fruition within 24 hours of taking office. Ports such as Los Angeles and Long Beach, which together receive a third of the total containers arriving in the United States, registered record levels of activity already in October, before the elections, when the Republican candidate repeated from the rooftops that tariff is “the most beautiful word in the dictionary” and threatened a 60% tax on China. Freight rates from this country increased by almost 13% compared to the month of October of the previous year; in September, they grew only 2.4% in interannual rate.
China remains the world’s leading exporter of goods and the United States, its best customer. Last year, it bought about $430 billion from the Asian giant, most of it in computer and electronic products. But dressing or wearing shoes is not going to be cheap in the US either if the announced taxes come to fruition. The footwear and accessories firm Steve Madden plans to cut its production in China by between 40% and 45% and move it to neighboring countries such as Vietnam. Walmart, the American retail giant – and the country’s largest employer – has warned of the impact on prices, just as the executives of almost 200 companies in the S&P 1500 Composite index have been doing since the beginning of September, almost double the number on the eve of the 2020 elections.
The cheerful shot in the foot of tariffs, their use for trade and foreign policy objectives by the president-elect, has been summarized in a report by the Pearson Institute for International Economics (PIIE) titled What populists don’t understand about tariffs (but economists do). “The tariffs that Trump is now proposing will be applied to more than eight times the imports of his last round (about $3.1 trillion in 2023 data), which implies a much greater impact on prices,” the text warns. which emphasizes that, far from promoting local employment and production as the Republican intends, they will harm it.
The imposition of tariffs is also worrying in small and medium commerce. In the Flushing neighborhood, the most unknown Chinatown in New York, the Liu brothers wonder about the viability of their fashion and accessories store if the additional 10% to imports from China that Trump announced last Monday is materialized. His business replenishes stock twice a year, and partially four times a year, and shares the cost of imports with independent stores in San Francisco and Philadelphia, but the system will collapse with additional fees.
“If we don’t increase prices, we will lose a lot of money. And our prices were already a little high for the neighborhood, full of industrial and mass-produced offerings, and therefore cheaper. Without a clientele capable of paying 30% more for a sweater or a bag, which according to our calculations will be the minimum we will have to raise, we will have to close,” they explain as a duo about a measure with a boomerang effect that threatens to cause a spike in inflation. in the economy that he says he wants to protect.
Three blocks away, the manager of a giant Chinese supermarket who asks not to be identified shrugs his shoulders when asked about the impact. “95% of the products are imported from China, the rest from other Asian countries and a very residual part is produced here, such as some dairy products, or comes from Mexico and Canada, such as a few vegetables. We will have to raise prices, because there is no substitute local production, except for a very small number of products. Most of the vegetables and frozen fish come from China,” he explains.
Proximity shops
Local businesses such as the Lius’ independent store and the supermarket, also subject to the perishable condition of some of their merchandise, have neither the capacity nor the room for maneuver of wholesalers who have accelerated orders before January 20 – day of the takeover—, to hoard as much merchandise as they can. “We have bought $50,000 at a time, including all the previews of the next seasons, but we cannot go beyond the designers’ calendar and production. We also have no alternative, because they are young creators with still very limited production, hence also the greatest impact on the price,” conclude the Liu brothers.
When Trump began his trade war against China in 2018, American companies also rushed to advance imports as they are doing now. As a result, the trade deficit with China increased in 2018 before declining in 2019. Although China’s share of US imports fell to about 14% in 2023, from 22% in 2017, the increase in tariffs has done little to curb the overall US trade deficit in world trade or China’s overall trade surplus.
For some analysts, the tariff threat has an advantage: contributing to a “strong dollar policy.” “Our premise is that Trump is pursuing policies (higher tariffs, lower immigration, lower taxes) that are inflationary, pushing the Federal Reserve to be tougher in the 2025-26 horizon,” a note noted on the eve of the elections. to clients of the Macquarie Group. “Trump’s policies are strong dollar policies.”
As with its plans for mass deportation of immigrants, it remains to be seen if the announced tariffs are really applied. “In his first term, Trump tweeted threats of tariffs, usually at night, after watching Fox News, but those tweets didn’t usually go very far,” Scott Lincicome, a trade expert at the libertarian Cato Institute, recalled these days. in statements to public radio NPR.
The message in which the wife of the Pennsylvania executive said that this year they will be left without a Christmas bonus, concluded: “[Tras comunicar la cancelación del mismo] The president of the company had to explain what a tariff was and how it will directly affect the company. All [los trabajadores] They believed that the tax is paid by the foreign company from which products are purchased. This is the level of ignorance of those who vote against their own interests here in Pennsylvania,” and everywhere in the United States.
