US tariffs delay is a cold comfort for retailers

It looks as if the Trump administration didn’t want to be accused of ruining Christmas. The US Trade Representative’s office said that it would delay until December 15 the imposition of tariffs on certain goods coming to the US from China. The government said products such as cellphones, laptops, as well as some toys, clothes and shoes would be spared temporarily, though it plans to move ahead on September 1 with a 10 percent levy on other items from a batch of $300 billion worth of goods.
It’s no coincidence that the products subject to the delay are common Christmas gifts, the kinds of products that are essential drivers of consumer spending in the retail industry’s most important season of the year. President Donald Trump told reporters the timing was revised so it “won’t be relevant to the Christmas shopping season,” a change that all but
ensures that crucial merchandise that stores have ordered for this year’s holiday shopping rush will not be subject to new levies.
On some level, I’m sure retailers welcome the reprieve. These tariffs leave them with a host of difficult decisions to make, including how much they can raise prices before consumers balk and how much they can let tariffs eat into their profit margins before investors start running for the exits. At least they get to have more of a business-as-usual holiday season before they have to find out. It also gives them just a little more time to work on mitigation strategies, such as negotiating with suppliers, and to work on longer-term goals such as moving manufacturing away from China.
That said, this latest development should be seen as nothing more than cold comfort for the retail industry. President Trump keeps giving corporate America whiplash on trade. There were similar timing delays with earlier tariffs on goods made in China. Trump spooked some sectors in May with a threat to slap tariffs on goods coming to the US from Mexico as part of an attempt to get that country to bend to his will on immigration policy. The threat was neutered within days after they reached a deal to avert such levies, at least temporarily.
With each of these episodes, the Trump administration keeps proving itself impulsive and unpredictable on trade-related matters. This most recent tariff delay simply serves as a reminder that it will continue to be so. The White House is essentially a giant cloud of uncertainty over how the retail industry should manage everything from pricing to supply chain to inventory. The retail industry is already trying to navigate an extraordinary period of instability and change, given the rise of e-commerce, the fall of once-ubiquitous chains and other shifts in consumer preferences, such as the rise of healthier eating and lifestyles. It’s unfortunate that they have to add erratic trade policies to their list of potential stumbling blocks.

—Bloomberg