If you are one of the many shoppers looking for deals this holiday season, prices may be higher than expected due to new tariffs on imported goods. These tariffs are likely to impact both import shipping volumes and prices of goods throughout this holiday season.
The first implementation date of the S301 provisional tariff was July 6, 2018, which started at 25 percent on 818 items valued at $34 billion worth of imported goods from China. The second round was implemented August 23, 2018 on $16 billion worth of goods with an additional 25 percent on 279 items.
A month later, on September 24, 2018, List 3 was implemented on approximately $200 billion worth of imported goods from China at a rate of 10 percent on over 5,700 items. List 3 was to increase to 25 percent on January 1, 2019, but due to ongoing trade talks with China, the provisional tariff rate stayed at 10 percent until May 10, when it increased to 25 percent.
List 4A was released on September 1, 2019 at 15 percent, affecting $225 billion in imported goods and 3,079 items. List 4B is scheduled to commence on December 15, 2019 at 15 percent on an additional $76 billion covering 542 items.
The United States Trade Representative has opened an exclusion request portal for goods with exclusion status ending December 28, 2019. The period of submitting exclusions is expected to conclude November 20, 2019.
According to the Global Port Tracker, U.S. ports are forecasted to handle up to 1.97 million twenty-foot equivalent units (TEUs) in November 2019. To put that into perspective, most large container ships docking at U.S. ports carry about 18,000 TEUs per ship. The forecasted import level for November 2019 is about nine percent greater than it was November 2018, and levels are expected to fall in December 2019 due to the implementation of the new tariffs.
While the pressure is on for retailers to import more volume before the tariffs kick in, consumers may not be directly impacted this shopping season. Price increases will vary depending on the product and the retailer this year, but may ultimately result in higher price tags in 2020. According to Jennifer Safavian, Executive VP of Government Affairs for the Retail Industry Leaders Association, some retailers are adjusting by spreading small price increases out over a range of products to make up for large increases on particular tariffed items.
Price comparison between retailers is a major influencing factor of holiday purchases, particularly on Black Friday and Cyber Monday. According to the National Retail Federation (NRF), consumers plan to spend about four percent more on holiday-related gifts and expenses compared to last year. That spending, however, may be mitigated by the tariff implementation on December 15, 2019.
Nearly 60 percent of consumers surveyed by Coresight Research expressed worry regarding the effect of tariffs on holiday shopping. It is expected that the tariffs will drive shoppers to purchase fewer items or shop at a retailer with lower prices.
If you have any questions about how tariffs may impact your holiday shipping, please contact us or reach out to your Ascent Global Logistics representative directly.