For decades, the U.S. has been known as the country of abundance due to its incredible economic power and massive selection of goods. Its dependence on products from abroad has made it a major player in global trade.
Most Americans can relate to entering a massive grocery store like Walmart (WMT) or Costco (COST) and spending hours walking down the multiple aisles, which are filled to the brim with a wide range of products that come in all flavors, sizes, colors, and prices. After all, the U.S. is a first-world country for a reason.
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But, what if one day you entered your usual grocery store and all the shelves were almost empty, with multiple signs that say “one item limit per person” or “out of stock until further notice”?
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This event is almost unimaginable to most Americans, who have grown up surrounded by abundance all their lives. The thought of this happening would be like entering an episode of “The Walking Dead.”
However, this hypothetical event might soon become a reality nationwide.
Tariffs threaten imported consumer goods.
Image source: Shutterstock
The looming tariffs threaten imported consumer goods
Three months after taking office for a second term in January, U.S. President Donald Trump declared a national emergency. He implemented new tariffs on foreign-made imports, including an additional 10% baseline tariff.
A few days later, Trump paused the “reciprocal” duties on many countries for 90 days, except for China, which has been facing the effects since April 2.
From that day on, all shipments from China into the U.S. now face tariffs of up to 145%, making these costs nearly impossible for most businesses to sustain without suffering financial repercussions.
However, the 90-day suspension expires on July 9 for the rest of the countries, and its implementation threatens all imported consumer goods just in time for summer.
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Many companies have grown concerned about the adverse effects that the implementation of these tariffs could have on their finances, since some are highly or even solely dependent on imported foreign goods.
To mitigate the damages, some retailers have been strategizing and reorganizing their businesses by finding alternative vendors or stockpiling products to have enough inventory before the cost of importing products from abroad begins increasing.
Companies are already struggling with the current slowdown in consumer spending, making these tariffs another challenge they must learn to navigate.
However, in an uncertain economy, companies are not the only ones unsettled about the effects.
Consumers could face a highly dreaded reality this summer
Some consumers have started stocking up before the tariffs take effect, getting as many necessities as possible to avoid increasing their weekly budget.
Others hope that companies have reached agreements with their foreign partners to maintain the prices of goods at an attainable level.
And many are waiting to see how the looming tariffs will play out in the upcoming weeks to avoid panicking like they once did with toilet paper during the pandemic.
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According to Seroka, big importers say shoppers could start to see shortages and price hikes in around four to six weeks, as inventory runs out.
Around 9.3% of trade at the Port of Los Angeles involved exported goods, with the remaining 90.7% being imports as of February.
No surprise to many, China is the Port of Los Angeles’ top trade partner, making up 39% in value year to date for a total of $22 billion, representing a nearly 22% increase.
The U.S.’s top five trade partners account for 47.6% of all trade, but in the Port of Los Angeles, it’s around 75.5%.
However, a dreaded change in its usual trade finally occurred, sounding the alarm on the future of the trade industry.
Both imports and exports drastically dropped in February, which could signal that potential inflation and shortages are on their way.
Some may have to make the difficult choice of skipping their yearly family vacation this summer so they can save up for upcoming expenses.
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