Latest US tariffs on China take effect
The Trump administration's latest round of tariffs on Chinese imports have taken effect, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer goods in advance of the holiday shopping season.
The 15 per cent taxes apply to about $US112 billion ($A166 billion) of Chinese imports. All told, more than two-thirds of the consumer goods the United States imports from China now face higher taxes. The administration had largely avoided hitting consumer items in its earlier rounds of tariff hikes.
But with prices of many retail goods now likely to rise, the administration's move threatens the US economy's main driver: Consumer spending. As businesses pull back on investment spending and exports slow in the face of weak global growth, American shoppers have been a key bright spot for the economy.
As a result of Trump's higher tariffs, many US companies have warned that they will be forced to pass on to their customers the higher prices they will pay on Chinese imports. Some businesses, though, may decide in the end to absorb the higher costs rather than raise prices for their customers.
After Sunday's tariff hike, 87 per cent of textiles and clothing from China and 52 per cent of shoes will be subject to import taxes.
On December 15, the administration is scheduled to impose a second round of 15 per cent tariffs - this time on roughly $US160 billion ($A237 billion) of imports. If those duties take effect, virtually all goods imported from China will be covered.
A study by J.P. Morgan found that Trump's tariffs will cost the average US household $US1,000 ($A1484) a year. That study was done before Trump raised the Sept. 1 and December 15 tariffs to 15 per cent from 10 per cent.
The president has also announced that existing 25 per cent tariffs on a separate group of $US250 billion ($A371 billion) of Chinese imports will increase to 30 per cent on October 1.
That cost could weaken an already slowing US economy. Though consumer spending grew last quarter at its fastest pace in five years, the overall economy expanded at just a modest 2 per cent annual rate, down from a 3.1 per cent rate in the first three months of the year.
The economy is widely expected to slow further in the months ahead as income growth slows, businesses delay expansions and higher prices from tariffs depress consumer spending. Companies have already reduced investment spending, and exports have dropped against a backdrop of slower global growth.
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