White House: Amazon’s tariff announcement is “hostile”
The White House responded to reports that Amazon plans to display its share of what it calls “hostile” the costs of items obtained from tariffs.
December has been over six months, but President Donald Trump has admitted that it could be tougher for families this holiday season.
“Someone said, ‘Yeah, the shelf will open,'” Trump told reporters Wednesday. “Well, maybe kids have two dolls instead of 30 dolls. And maybe two dolls cost a few more dollars.”
But what does that actually mean?
Economists are worried that Trump’s drastic tariffs could raise prices and lead to shortages. These are two things that can make buying gifts and preparing for holidays more difficult.
Trump’s repeated response to tariffs has shaken the stock market, consumer confidence and GDP, but the impact on product costs and availability is still not fully felt. On Wednesday, Trump appeared to allow tariffs to force consumers to cuts.
On April 2, Trump announced tariffs on goods imported from most countries. He later announced a 90-day suspension for some of them, but import orders to the US fell down, according to James Knightley, an international economist at the Bank of Dutch.
An April report released by Apollo Global Management sets out a timeline that explains when consumers can begin to feel the impact of tariffs. The report estimates that it will take 20-40 days for containerships to reach US ports and 1-10 days for them to travel to cities. By mid-May, containerships to US ports are predicted to halt, and by late May, consumers will begin looking at “empty shelves.”
But are the shelves really empty and how expensive are the products? Here’s what we know now:
If nothing changes, “a shortage like a pandemic.”
Whether or not US consumers face shortages will depend heavily on what happens in the coming weeks.
Trump said the 145% tariffs imported from China would ultimately “devastly collapse,” and that his administration is negotiating with dozens of other countries over the tariffs.
Robert Handfield, a professor of supply chain management at North Carolina State University, doesn’t think he’ll see empty shelves for a month or two.
But if Trump doesn’t pivot right away, problems can arise.
“The shortage is not imminent, but we have seen some in the coming months,” Knightly said.
On April 21, major retailers, including representatives from Walmart and Target, met with Trump to discuss how tariffs will affect imports.
“The leadership of these companies has reported to the president that they have run out of stock by mid-May, and Americans have told them that if policies are not adjusted, they need to prepare for shortages like the pandemic.”
O’Rourke said this is why Trump said he might act to reduce tariffs on goods imported from China shortly after the meeting.
“The empty cupboard story is simply nonsense,” said Steve Blitz, a US economist at GlobalData, in an investor’s note. He said the sellers would make money by converting inventory into cash, and decided to call companies to hold the inventory “business misconduct”.
Handfield said Walmart and Target received “many” pre-shipping when they saw the tariffs coming.
“Their warehouse is full of products because they planned it first,” Handfield said. “When they’re running out of stock and need to refill, that could be a problem.”
Will the price go up?
Trump’s comments addressed the toy industry on Wednesday. This could have been the hardest hit by tariffs. According to data from the US Department of Commerce, 75% of toys sold in the US are imported from China.
However, he says that “almost everything” is affected.
“Shoes, apparel, toys,” Handfield said. “Kitchen appliances and Nick’s tips, baskets, storage – almost everything is made in China.”
Without a trade policy pivot, Nightley said it is likely that people will notice price increases when it’s time to go to school or Black Friday shopping.
Some prices have already risen. Three weeks after Trump’s April 2nd announcement, Amazon prices rose 4.2% for 50 products. Prices for the same products from Walmart and Wayfair increased by 2% and 1.3% respectively.
O’Rourke said the meeting of major retailers with the president came just a few weeks after Walmart executives said the company was confident in its business strategy despite the new customs environment. Walmart Chief Financial Officer John Rainey reminded investors on April 9 that more than two-thirds of what they sell are made in the US.
“The CEO draws dark pictures for the president, but it’s not great to tell your investors a prominent story at the same time,” O’Rourke said.
For those who wanted to jump on holiday gifts by shopping at Amazon Prime Day in mid-July, tariffs have caused some sellers to reconsider their participation.
Reuters reported that third-party sellers who previously offered products made in China during Premier Online Shopping Day are considering reducing the amount of discounted items they offer this year or posting the event fully.
Contributions: Medora Lee and Andrea Riquier
Reach Rachel Barber at rbarber@usatoday.com Follow her at x @rachelbarber_