It's September 1, and that means a new round of tariffs in the ongoing trade war with China are about to go into effect. Most consumer goods made in China (which is to say most consumer goods) will begin carrying a 15 percent tariff starting today, with no grace period for goods that were already in transit to the U.S. Everything from toothbrushes to milk to children's toys will get pricier. So will 92 percent of apparel imported from China. So will many electronic products. In particular, Airpods, Apple Watches, and just about everything made by Apple is likely to be affected, since the company has bet big on manufacturing in China.
Are you likely to see higher prices the next time you go to the store? It's complicated. On one hand, retailers know higher prices are coming and right now, when the tariffs are known to be taking effect, is a logical time to raise retail prices. On the other hand, China, which controls its currency's value against the dollar and other world currencies, has let the value of its yuan sink, largely making up for price increases caused by the tariffs. Whether that policy will continue, or continue to make up for increasing tariffs over time is anyone's guess.
Get your shopping done early.
In the short term, many experts are suggesting that Black Friday and holiday shopping prices could be affected, meaning that now may be the best time to start on your holiday shopping, or make any large purchases of imported consumer goods you may be planning. In the longer term, the tariffs will cost American households an average $1,000 per year, according to new figures from J.P. Morgan. That's up from an estimated $600 from an earlier round of tariffs imposed in May. In all, according to the Information Technology Industry Council, import tariffs imposed during the trade war have already cost U.S. consumers $27 billion.
And we're far from done. Unless something changes--which of course is always possible--new sets of additional tariffs will go into effect on December 15 a date chosen to avoid having consumer prices skyrocket during holiday shopping season. And on October 1, some of the current 25 percent tariffs may rise to 30 percent.
Where will all this leave the U.S. economy? Weaker than it was before, experts agree. They're still uncertain whether the economy will fall into a recession in the coming year but Moody's, for example, has raised its estimate of the likelihood of a 2020 recession from 35 percent to 50 percent. The Trump administration is reportedly considering various measures, including proposing a reduction in payroll tax, to bolster the economy if it continues to show signs of weakening. But, in public remarks, president Donald Trump has called a recession in the short term "irrelevant," given the need to fight China on trade policies. "The fact is, somebody had to take China on," he said.