NRF turns on Trump over tariffs
Retailers who became big fans of the Trump administration following tax reform are singing a different tune over the imposition of tariffs, described by one major trade group as a self-inflicted wound on the nation’s economy.
As retailers reported holiday sales results during the past month, many used the occasion to detail the meaningful benefits tax reform would have have on their operations, shareholders and employees. Positive feelings toward President Trump never seem to last very long, regardless of the issue, and so it was with the retail industry and his decision to impose tariffs on foreign steel and aluminum. The March 8 announcement was met with a swift rebuke from the National Retail Federation and the Retail Industry Leaders Association.
“A tariff is a tax, plain and simple,” NRF President and CEO Matt Shay said in a statement released while President Trump was still discussing the issue of trade on live TV. “In this case, it’s an unnecessary tax on every American family and a self-inflicted wound on the nation’s economy. Consumers are just beginning to see more money in their paychecks following tax reform, but those gains will soon be offset by higher prices for products ranging from canned goods to cars to electronics.”
Retailers are typically among the most ardent supporters of free trade and trade agreements that allow for the unfettered global sourcing of goods, even when it means sourcing from nation’s whose advantages stem from low wage rates, lack of worker protections and limited environmental regulations. So it is not surprising that Shay offered sharp-tongued criticism of the administration and its motives.
“The retail industry is extremely concerned by the administration’s apparent desire to ignite a trade war, where the net losers will be the very people the president wants to help,” Shay said. “On top of steel and aluminum tariffs, retailers are troubled by the direction of the ongoing NAFTA negotiations and the threat of additional tariffs on consumer goods from China. The true greatness of America cannot be realized when we build walls blocking the free flow of commerce in today’s global economy.”
Hun Quach, Vice President of International Trade with the Retail Industry Leaders Association cautioned that tariffs could have severely negative consequences for the American economy, but stopped short of presuming the President’s intent is to spark a trade war.
“If broadly applied, these tariffs will have a downstream impact on every sector, and will raise the stakes for other countries to take retaliatory measures that will hurt America’s exporters,” Quach said. "The administration’s desire to challenge other country’s trade violations is an important goal for free and fair trade, but a broadly applied tariff could spark a potential trade war that zaps consumer spending and American exports."
Refuting both organizations views was Wilbur Ross, U.S. Secretary of Commerce. In a posting on the Commerce Department’s web site he explained the 25% tariff on imported steel and 10% tariff on imported aluminum would halt the damage caused by unfair trading practices from countries such as China whose actions have distorted global markets. The new tariffs will allow steel and aluminum producers to reopen U.S. plants, expand operations and attract new workers, according to Ross.
“It is true that higher steel and aluminum costs could mean price increases for American consumers,” Ross explained, “but they should be small for individuals and families. Monthly payments for a typical mass-market car might increase by $4 because of the tariff, according to Commerce Department estimates. Is that a fair price to pay for protecting national security? We think so.”
The tariffs shouldn’t start a trade war, according to Ross, who said the President was unwilling to stand idle while unfair practices erode America’s steel and aluminum industries and threaten national security.