The New York Federal Reserve Bank published research on Thursday (May 23) saying that increased U.S. tariffs on Chinese imports will cost the typical American household $831 a year, according to a report by Reuters.
The Trump administration raised existing tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent, which caused China to come back with its own levies on U.S. imports, all against the backdrop of stalled talks.
The 10-month trade war, the Fed said, will probably give importers the incentive to switch to goods from more expensive countries. If that happens, the United States might end up collecting less revenue from the China tariffs.
U.S. Treasury Secretary Steven Mnuchin told lawmakers on Wednesday that the rising tariffs won’t lead to significant cost increases for households. Some lawmakers disagreed.
“It appears beyond evident that consumers will pay this price,” Rep. Cindy Axne of Iowa said in a letter a day after Mnuchin appeared before the House of Representatives’ Financial Services Committee.
In the letter, she asked Mnuchin to share the Treasury’s research about how the tariffs were going to affect prices.
Mnuchin said companies could get products from other places than China, and that would help with rising price costs. He also said that currency effects, lower profit margins and several other factors would help with the impact of prices.
The news comes as the retailer has seen its best comparable sales growth in nine years with Q1 results. Shares in the company have grown 7 percent this year, and they went up another 4 percent in early trading, to $103.84.
Walmart Chief Financial Officer Brett Biggs said the increased tariffs will cause prices to rise, and that the company will try to make it easier on consumers by attempting to get products from other countries and working with suppliers’ “costs structures to manage higher tariffs.”
Walmart’s grocery division is about 56 percent of its overall revenue, and Moody’s Analyst Charlie O’Shea said the tariffs are limited by its food business. “We believe Walmart has the wherewithal, both financially and via its vendor relationships, to minimize the impact on both itself and its shopping base,” he said.
Greg Foran, Walmart’s U.S. chief executive officer, said the retail giant is going to keep its “low-price leadership” and try to “manage costs on an item-by-item basis.”