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Friday, July 12, 2024

Consumer spending drops as Trump increases tariffs

A shopper walks past a sales sign. (REUTERS/Steven Saphore)

America’s economy runs into a major speed bump Sunday as new tariffs increases between president Donald Trump and China began and economic experts expect prices to rise on many retail goods and drive down spending by consumers.

Many U.S. companies warned Trump that the 15% hike in tariff taxes on goods from China forces them to raise prices on items imported.  At present, America buys 87% of textiles and clothing from China, along with 52% of shoes.

Trump is threatening to raise even more import fees of 15% more on Dec. 15 to cover any and all items from China.

China, of course, is targeting items from America for import penalties and tech company executives say that will give the orientals an advantage because the government there subsidizes the tech items that compete with U.S. products.

Trump lies to Americans with his claim that China pays the tariffs he imposes but economic research shows the costs of those taxes falls on American businesses and consumers.

A new study by J.P. Morgan says Trump’s tariffs costs the average American household at least $1,000 a year, which means Americans have less money to spend in our own economy.

“The data indicate that the erosion of consumer confidence is now well underway,” says Richard Curtin, who heads the University of Michigan’s consumer sentiment index.

Some retailers say they will try to absorb the tariff increases without raising prices but that trend won’t last long, say economic analysts.  Consumer spending is dropping, the Michigan study warns, and latest data shows the most drastic drop since December 2012.

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