President Donald Trump’s aggressive stance on trade is starting to hit American importers where it hurts.
Companies that imported goods from abroad paid a total of $6.2 billion in tariffs in October, a record high for the country and more than double what businesses paid as recently as May 2018, according to a new analysis of monthly import and export data from the U.S. Census Bureau and Department of Agriculture by the lobbying coalition Tariffs Hurt the Heartland.
The increase has been particularly dramatic among products affected by the China 301 tariffs under negotiation between Trump and Chinese president Xi Jinping. October was the first month the Trump administration’s full array of tariffs on $250 billion in Chinese goods went into effect, raising the taxes that U.S. businesses paid on these goods from $1.2 billion in September to $2.6 billion in October. (Until July, these tariffs had held steady at around $400 million per month.)
U.S. companies that export certain goods directly to other countries are also contending with retaliatory tariffs imposed by China, Canada, Mexico, the European Union and others, making their products more expensive to their customers abroad.
On Dec. 1, the U.S. and China agreed not to levy any additional tariffs or raise existing ones while the two countries attempt to reach a deal, so importers shouldn’t see any dramatic increases within the 90-day truce period. However, if the talks fail, Trump has threatened to raise tariffs from 10 percent to 25 percent on a list of goods that includes many consumer products.
Companies that import directly from China are faced with three options: swallow the additional costs themselves, convince their suppliers to lower their prices to lessen the tax burden or pass the costs along to their customers.
Walmart, for its part, has said the latter option may be necessary if the U.S. and China can’t come to a compromise. Speaking to CNBC on Thursday, CEO Doug McMillon said the company was looking to the new year to determine whether any price hikes will be necessary. “We try to go up as little as we can and as late as we can for customers, but there are some categories where over time this will show up,” he said.