Trump’s unintended gift to holiday shoppers

If you get a good holiday deal on a laptop or TV, you might have President Trump’s combative trade policies to thank.

That’s not because Trump’s tariffs and other protectionist measures have cut production costs or prices. Instead, retailers seem to have sharply boosted their orders of imported goods from China, to stock up before possible new tariffs go into effect. That surge in inventories might lead to unusual price wars or other discounts in order to move this mountain of merchandise.

Trump has already put new 10% tariffs in place on about $250 billion worth of Chinese imports, or about half of everything China sends to the United States every year. But that mostly includes industrial goods and components used to build other things. Trump has left most finished consumer products off the list, to spare consumers the direct pain of price hikes that normally come with higher tariffs.

RELATED: President Trump pardons turkeys at the White House

10 PHOTOS
President Trump pardons turkeys at the White House
See Gallery
President Trump pardons turkeys at the White House
A live turkey is brought into the James S. Brady Press Briefing Room before the media at the White House, Tuesday, Nov. 20, 2018. The pardoning ceremony, to happen later, will mark its 71st year since it first took place in 1947. (AP Photo/Manuel Balce Ceneta)
U.S. President Donald Trump speaks during the 71st presentation of the National Thanksgiving Turkey in the Rose Garden of the White House in Washington, U.S., November 20, 2018. REUTERS/Jonathan Ernst
One of the National Thanksgiving Turkeys is presented to members of the press in the Briefing Room before U.S. President Donald Trump participates in the 71st national turkey pardoning at the White House in Washington, U.S., November 20, 2018. REUTERS/Leah Millis
White House senior adviser Ivanka Trump arrives prior to U.S. President Donald Trump participates in the 71st presentation of the National Thanksgiving Turkey in the White House Rose Garden of the White House in Washington, U.S., November 20, 2018. REUTERS/Jonathan Ernst
U.S. President Donald Trump speaks next to first lady Melania Trump during the 71st presentation of the National Thanksgiving Turkey in the Rose Garden of the White House in Washington, U.S., November 20, 2018. REUTERS/Leah Millis
White House senior advisor Ivanka Trump arrives with her children Theodore, Arabella and Joseph Kushner prior to the 71st presentation and pardoning of the Thanksgiving turkeys in the Rose Garden of the White House in Washington, U.S., November 20, 2018. REUTERS/Jonathan Ernst
President Donald Trump pardons "Peas", during a ceremony to pardon the National Thanksgiving Turkey, in the Rose Garden of the White House in Washington, Tuesday, Nov. 20, 2018. (AP Photo/Carolyn Kaster)
Two turkeys from South Dakota get comfortable in their room at the Willard InterContinental Hotel, after their arrival Sunday, Nov. 18, 2018, in Washington. The turkeys will be named and pardoned by President Donald Trump during a ceremony at the White House ahead of Thanksgiving. (AP Photo/Jacquelyn Martin)
President Donald Trump with first lady Melania Trump, right, and their son Barron Trump, applauds after pardoning Drumstick, the National Thanksgiving Turkey during a ceremony in the Rose Garden of the White House in Washington, Tuesday, Nov. 21, 2017. This is the 70th anniversary of the National Thanksgiving Turkey presentation. (AP Photo/Manuel Balce Ceneta)
President Donald Trump pets "Peas" one the National Thanksgiving Turkeys, after pardoning it in the Rose Garden of the White House in Washington, Tuesday, Nov. 20, 2018. (AP Photo/Andrew Harnik)
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

But that may not last. Trump has said he plans to extend new tariffs to all Chinese imports—including electronics, clothes, toys, furniture and thousands of every-day purchases—if China doesn’t agree to his demands on trade. There’s no strict timetable, but Trump has indicated Jan. 1, 2019, is his next deadline. If there’s no progress in talks with China by then, Trump could escalate further, by slapping tariffs on all Chinese imports, and raising the 10% tariff already in place to 25%.

Retailers seem to be planning for the worst. New data from research firm Panjiva show that imports of TVs from China surged 37%, year over year, in the four-month period that ended Oct. 31. That’s normally the window when retailers stock up for the critical holiday season that begins Thanksgiving week. Other increases in imports from China during that four-month period: 46% for laptops, 30% for audio products, 20% for microwaves and 57% for freezers and refrigerators.

Retail sales are up 4.6% during the last year, a healthy pace that’s likely to continue through the holiday shopping season. But retailers have obviously ordered far more Chinese imports than they expect to sell through the end of the year. “We’ve had a significant ramp-up in imports from China,” says Panjiva analyst Chris Rogers. “That would suggest lower pricing. The question is the timing—will it be lower pricing for Black Friday? Or lower pricing in the new year?”

RELATED: Best Black Friday deals from Target

23 PHOTOS
Best Black Friday deals from Target
See Gallery
Best Black Friday deals from Target

23andMe Personal Ancestry Kit

Sale: $59.00

Reg: $99.00

Save $40.99 + Free $10 Target GiftCard with purchase

BUY IT

Instant Pot Duo 7-in-1 6-qt. pressure cooker

Sale: $69.95

Reg: $99.95

Save $30 + Free $10 Target GiftCard with purchase

BUY IT

Google Home Mini

Sale: $25.00

Reg: $49.00

BUY IT

Fujifilm Instax Mini 9 camera

Sale: $59.99

Reg: $69.99

Save $10 + Free $15 Target GiftCard with purchase 

BUY IT

Shark ION X40

Sale: $149.99

Reg: $299.99

BUY IT

2.4-qt. Power AirFryer XL

Sale: $49.99

Reg: $99.99

BUY IT

Samsung 55" 4K HDR UHD Smart TV

Sale: $329.99

Reg: $529.99

BUY IT

Roku Ultra Streaming Player

Sale: $49.99

Reg: $99.99

BUY IT

Amazon Echo (Gen 2)

Sale: $69.99

Reg: $99.99

BUY IT

Samsung 2.1 Channel 130W soundbar

Sale: $119.99

Reg: $199.99

BUY IT

Fitbit Versa smartwatch

Sale: $149.00

Reg: $199.95

BUY IT
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

There’s no price data yet for anything that might constitute holiday spending, but the Trump tariffs on Chinese imports has so far produced a somewhat counterintuitive outcome. Tariffs are a tax that directly add to the cost of an import at the point of entry into the United States. So all else equal, tariffs add to costs and prices. Yet Labor Department data shows that the price of Chinese imports rose just 0.3% during the last year, which is the second-lowest change among major U.S. trading partners. The average price change for imports from industrialized countries was 3.7%. That probably indicates wholesale discounting taking place to minimize disruption to global supply lines.

But if the Trump tariffs remain in place or intensify, discounting won’t last, and consumer prices will almost certainly go up. The real-world case study for this is washing machines. Early this year, Trump imposed tariffs of 15% to 60% on imported washing machines. Imports surged before the move, as U.S. retailers stocked up, in anticipation of tariffs. But imports fell after the tariffs went into effect, and prices rose at least 20%, according to investing firm UBS.

Part of the price hike was from the cost of the tariff itself. But domestic manufacturers whose products weren’t subject to the tariffs also raised prices, since the competition was now more expensive. “Domestic producers appear to have used the tariffs as an opportunity to raise prices,” analysts at UBS wrote in August. “Likewise, the industry seems to have boosted the prices of dryers in sync with the price of washing machines.” There were no new tariffs on dryers, yet prices went up anyway. The price of laundry equipment is still 16% higher than it was before Trump’s tariffs hit.

That suggests any discounts on consumer products from China during the few weeks might actually be as good as retailers try to make them sound. If Trump intensifies his trade war with China, as promised, the next blowout sale you encounter could be the last one for a while.

Confidential tip line: rickjnewman@yahoo.comClick here to get Rick’s stories by email

Read more:

Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman

Read Full Story
  • DJI26670.80159.750.60%
    NASDAQ8109.3494.071.17%
  • NIKKEI 22522259.7441.840.19%
    Hang Seng29963.24-0.02-0.00%
    DAX12235.5113.120.11%
  • USD (PER EUR)1.12-0.0044-0.39%
    USD (PER CHF)0.98-0.0062-0.63%
    JPY (PER USD)111.85-0.0840-0.08%
    GBP (PER USD)1.29-0.0036-0.28%