Diamonds, pearls, natural pearls, precious stones, including rubies, sapphires, emeralds, synthetic precious stones and diamonds, silver jewelry, gold necklaces, religious jewelry, toy jewelry and more. This is the beginning of the list.
The 10% increase on tariffs is due on Sept 1, 2019, but could go to 25%.
According to the U.S. Census Bureau, China is a substantial importer of jewelry into the U.S., importing $2.09 billion in jewelry in 2018, around 15% of overall imports. China also shipped $233 million in gem diamonds to the U.S. in 2018 and $1.01 billion in gemstones. And jewelers will pass this on to the consumer, no doubt.
Among the sectors that could be hit hard are lab-grown diamonds. Smaller synthetics are increasingly grown in China, though, like natural diamonds, many are cut in India and may escape tariffs that way. Since India does such a brilliant job cutting stones, this could be the way to avoid a tariff hike. The increase in price would also include any packaging which the jewelry stores pay for. Now some jewelers have stated that with the hike in gold they simply can’t increase prices again on top of the increase on gemstones and packaging. This increase they will simply need to eat.
National Retail Federation (NRF) senior vice president of government relations David French said in a statement that his group is “disappointed the administration is doubling-down on a flawed tariff strategy that is already slowing U.S. economic growth, creating uncertainty and discouraging investment. Most Americans have heard something about the increase on the tariffs, but it will not his home till they go shopping and see the prices. Hopefully, all this can be avoided.
“These additional tariffs will only threaten U.S. jobs and raise costs for American families on everyday goods,” he continued. “The tariffs imposed over the past year haven’t worked, and there’s no evidence another tax increase on American businesses and consumers will yield new results.”
The ongoing trade war has led to a roller-coaster week on Wall Street, but President Trump said in a tweet today that the problem isn’t China, it’s the Federal Reserve, which needs to cut rates faster. If that is what we are dealing with by all means speed up cutting rates.
“We will WIN anyway,” he continued, “but it would be much easier if the Fed understood, which they don’t, that we are competing against other countries, all of whom want to do well at our expense!” Hasn’t it always been this way?
Even so, many feel the economy is looking a little more fragile now. Mark Zandi, chief economist at Moody’s Analytics, said the ongoing escalation has now raised the possibility of a recession next year to 55% from 40%.
A recent survey by Shopkick of 30,000 consumers found that 44% said they will shop less frequently in response to the tariffs. Nearly 40% said they have already seen prices increase, and 60% said they will adjust where they shop. This makes it appear that some places will not do a big price increase afraid of losing customers, and willing to take a hit in some cases.
A lot depends on how long the conflict drags on. The Wall Street Journal reported this week that “Chinese President Xi Jinping can ill afford to make [trade] concessions, raising the likelihood of a protracted struggle between the world’s two biggest economies.”
However, the president thinks it’s only a matter of time before America comes out on top.
Four months ago, he tweeted that the trade war will end “much faster than people think.” I hope he is correct. Better if it never gets off the ground.
Courtesy JCK Magazine
Rob Bates, Editor