New York, NY - An escalating trade war between the U.S. and China could mean higher prices on a broad array of products from toys to clothing.
But some retailers will be less equipped to handle the pain than others, leaving consumers to carry the load.
Analysts say big box giants like Target and Walmart who marked their latest quarter with strong performance are best positioned to absorb the higher costs because of their clout with suppliers.
They’re also taking a judicious approach to price increases to lessen the impact.
The losers will be the ones that have been struggling all along — the mall-based clothing stores and others that sell commoditized products like basic sweaters or that don’t have the financial wherewithal to absorb extra costs.
Consumers, as well as most retailers, had been left largely unscathed by the first several rounds of tariffs that the U.S. imposed on China because they mostly focused on industrial and agricultural products.
But that began to change when items like furniture saw an increase in tariffs to 25% two weeks ago.
Retailers will absorb the extra costs when those products arrive in U.S. ports in June.
But now the Trump administration is preparing to extend the 25% tariffs to practically all Chinese imports not already hit with levies, including toys, shirts, household goods and sneakers.
Cowen & Co. estimates shoppers could see as much as 10% to 15% in price increases across all goods imported from China, which would mean an incremental cost of $100 billion or more.