NRF: Trump tariffs to have ‘detrimental’ impact on consumer costs

The National Retail Federation has warned that President-elect Donald Trump’s proposed tariffs could cost consumers between $362 to $624 annually per household for the purchase of goods imported from China.

NRF said blanket tariffs on imports from China could have a significant impact on the costs of a wide range of U.S. consumer products. Other economists say a relaxed regulatory climate and lower taxes could be a positive for retailers.

“The increases in tariffs resulting from Trump’s proposal would be dramatic,” the NRF noted. “The proposed tariffs would have a significant and detrimental impact on the costs of a wide range of consumer products sold in the United States, particularly on products where China is the major supplier.”

The trade group said even when considering potential new U.S. production and alternative sources of supply, the proposed tariffs on six product categories – toys, furniture, apparel, footwear, household appliances and travel goods – would reduce American consumers’ spending power by $46 billion to $78 billion annually.

“Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices,” stated NRF Vice President of Supply Chain and Customs Policy Jonathan Gold. “A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter. This tax ultimately comes out of consumers’ pockets through higher prices.”

NRF data came from a study it commissioned with Trade Partnership Worldwide.

Walmart is one of the nation’s largest importers of goods and company CEO Doug McMillon congratulated the president-elect.

“Congratulations, President Trump! We look forward to working with you, your administration and all elected officials across the country to continue investing in American manufacturing, and deliver value for our customers,” McMillon posted Wednesday on social media.

Retail analyst Neil Saunders of GlobalData and economists at J.P Morgan also see a bigger picture for the retail and consumer sectors.

“For retail, the Trump victory brings a mixed bag of positives and negatives, with a large dose of uncertainty. The main positive for retail is that President Trump will almost certainly renew the tax cut package he introduced during his first term in 2017, which was due to expire at the end of 2025. This will be broadly helpful to consumer incomes, although retailers should not expect to see a surge in spending as it is about rolling over an existing policy that is already baked into consumer behavior,” Saunders said.

He said there is a possibility that taxes might be cut further.

“It’s likely that new cuts will be targeted and focused on exempting tips and overtime pay from income tax and allowing households to take more deductions. In the round, this will put more money into consumers’ pockets and will bring a small boost to retail spending,” Saunders said.

Michael Feroli, chief U.S. economist at J.P. Morgan, said Thursday there is much uncertainty with just how deep the tariffs will go. He estimates some tariffs will be levied but said the Administration will likely use them as a negotiating tactics. He said businesses across the board will be better off in a less regulatory climate which is what likely fueled the rally in the equity markets following Trump’s win. He also said lower taxes, the extension of the Trump tax cuts in 2026 are also positive for businesses, including retailers.

However, the Congressional Budget Office has estimated that extending the Trump tax cuts will add $4.4 trillion to the national deficit. The Committee for a Responsible Federal Budget estimates that planned Trump tax cuts could add $7.5 trillion to the deficit.

Saunders expects the Trump administration will be less hostile to mergers and acquisitions. He said this does not mean that big deals like Kroger-Albertsons will be waved through.

“Despite the shock change, it should be noted that changes happen at the margins and occurs over time. A second Trump administration will not collapse retail, nor will it propel it to dizzying heights. It will simply change the gradient of the growth trajectory, and the tonality of the policies retailers need to deal with,” Saunders said.