Trade War’s impact on the US wallets

As promised, another set of tariffs on Chinese goods went into action on September 1. Over $112 billion of goods imported from China meant booming prices of clothing, shoes and other consumer goods arriving in US ports. Initially, over 82% of inputs were immediately affected by the tariffs, while the Peterson Institute for International Economics expects an overall effect on 99% until December 15.

The current situation is not a surprise. The effect it has on the economy is hurtful but expected. The US President Donald Trump claims the decision is coming after a long and detailed consideration of all aspects of the situation, as well as any other. The risk on consumer’s pockets is eminent, and this outcome was expected and feared for over a year now.

Retailers across the US are aiming to prevent the damaging consequences to their businesses by jacking up prices in the following months leading up to Thanksgiving craze. The retail industry could be an unexpected supporter of Trump’s plans regarding tariffs. Still, the strategic precision itself is no longer possible in these surroundings.

So, what does it mean for the consumers’ wallets? It’s highly unlikely you will find a rack marked: “Prices raised by trade war here”, so you will have to do a little research on your own. Keep in mind that the individual chains are the ones with pricing power. The current situation has its separate effects on the markets, too. The S&P 500 index is considerably close to the recession levels, despite the higher-than-expected stocks performance since the beginning of the year.

What is the current state of the US economy? So far, this is marked as the month of the biggest fall since 2012. The levels are even lower than after the election of the current US President Donald Trump. The initially strong economy over the past 2 years is providing the president an extra push and encouragement to go bold and beyond with the tariffs on Chinese goods, but the moves have previously shown to be damaging to both economies.

Still, Trump’s plan is not only set in motion but will be continued with another 15% tariffs on $300 billion worth of Chinese import by the end of the year. As a response, Beijing has reinstated tariffs on US crude oil. The cycle continues, bringing Asian stocks down and the prices of gold and oil to sky-high levels. The continuation of the US-China trade talks is in question now more than ever, with Beijing advising Washington to focus on the deal rather than slapping more tariffs, which are unproductive for both sides.

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