Imports to reach 'unusually high levels,' anticipating 4th round of tariffs

Dive Brief:

U.S. retailers are expected to import goods from China at "unusually high levels" through the spring and summer in response to new threats of tariffs by President Donald Trump, according to The National Retail Federation.
The U.S increased existing tariffs on $200 billion worth of Chinese goods this morning at 12:01 a.m. ET, and new levies are apparently already in the works. "The process has begun to place additional Tariffs at 25% on the remaining 325 Billion Dollars," Trump tweeted this morning.
"Much of this is driven by consumer demand but retailers are likely to resume stocking up merchandise before new tariffs can take effect," NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a press release. "Tariff increases and new tariffs will mean higher costs for U.S. businesses, higher prices for American consumers and lost jobs for many American workers."

Dive Insight:

A month ago, the news coming from NRF was hopeful. "Tariff increases are on hold and progress is being reported in talks between the United States and China, so the imports we’re seeing now are driven primarily by expectations for consumer demand," Gold said in a statement last month.

Now Trump is accusing China of reneging on promises made over the course of the months-long negotiations between the two most powerful economies in the world. These are accusations China denies.

Shipments that left China before this morning at 12:01 a.m. EST will not be affected by the tariff increases as long as they arrive in the U.S. before June 1. This window is a "somewhat positive sign" for how negotiations might be going, according to a Goldman Sachs research note cited by Reuters.

A new round of tariffs — which has yet to be imposed, but is apparently in the works — does not yet have a date attached to it. The tariffs would cover everything from toys to footwear to mineral products coming from China, according to an analysis from the Peterson Institute for International Economics.

"Certainly, it would seem probable that retailers, to the extent that they're able, would try to move up shipments of merchandise for the simple fact that they don't know when the tariffs are going to take place," J. Craig Shearman, the vice president of government affairs public relations at NRF, told Supply Chain Dive in an interview.

This trend of high imports as a result of tariff threats was clearly seen in 2018, Shearman said.

China has said it could retaliate as a result of the tariff increases and the threat of a new round of tariffs. It's not yet clear how this would unfold. China has a few options, including imposing more tariffs or going after American companies by withholding needed licenses or permissions to operate in the country, according to The Wall Street Journal.

Trump continues to make the inaccurate claim tariffs are being paid by China. This has been shown not to be the case.

"This is not something being paid for by China," Shearman said. "This is a tax on American businesses and American consumers. The effect of this for the foreseeable future is simply driving up prices for Americans rather than punishing the Chinese."