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Black Friday Starts, U.S. Retailers Swallow Tariff Costs

Source:Iris Liang Time:2019-12-2 11:55:04

As the Black Friday shopping festival approaches, the prices of products from major US retailers such as Walmart and Amazon have remained relatively stable and have not increased significantly.

The US media believes that this shows that the trade friction is still ongoing. In order to prevent consumers from paying for tariffs, the retail giants have to "swallow" rising costs in exchange for a beautiful sales figure.

In fact, the "Black Five Shopping Festival" is not only the peak sales season for retailers every year, but also a key moment for them to improve their performance.

The retail price of goods has not risen sharply

Reuters reported on the 28th that research data from retail industry research firm Profitero showed that Wal-Mart's more than 6,000 products were only 0.4% more expensive than a year ago; Amazon's 9,200 products rose 0.6%; while Target and Target GameStop retail product prices also fell 0.9% and 1.2%, respectively.

Only Staples and Best Buy increased their prices by 4.7% and 1.1%, respectively.

Profitero's vice president Keith Anderson said that, on average, retail electronics prices rose 2.3% over the same period, and retail product prices in all categories rose 0.9% over the same period. This is lower than the average inflation rate during the same period, with an inflation rate of 2.4% in 2018 and 1.8% since the beginning of 2019.

In addition, the company's data showed that prices of toys and games fell 0.2%, while video games fell 2%. Profitero surveyed 7 major US retailers and compared the changes in online prices of 21,000 products compared to October and November last year.

Reuters interviews with researchers, consultants and retail companies show that, although tariffs have pushed up the cost of products for many retailers, at least large companies have so far not passed this cost pressure on to consumers.

Currently, the retail giants have not commented on the research. But Wal-Mart and Target told Reuters that some corporate executives have stated how they manage tariffs by working with suppliers to diversify their supply chains.
This means that, as the "Black Friday Shopping Festival" approaches, these US retail giants are "digesting" the tariff costs brought about by trade frictions.

"Black Friday" one day after Thanksgiving and before Christmas is the golden period in the European and American countries' consumption seasons. It is reported that this period accounts for nearly 40% of the annual revenue of many retailers. After innovation, SEKO Machinery has submitted a satisfactory performance answer in 2019. Reliable quality and technology have won us the support of more and more merchants in domestic and foreign markets. According to customer requirements, customized stainless steel industrial steel tube production machines can be produced according to the orders received by customers, helping customers to meet their customers' requirements to the greatest extent. .

US companies, consumers "pay" for tariffs, not China

In September this year, the United States escalated trade frictions with China and imposed tariffs on US $ 125 billion in goods. These products have everything to do with the lives of Americans, from smart watches and televisions to shoes and sporting goods to meat and dairy products.

Reuters cited data from the Consumer Technology Association in August that some of China ’s electronics exports to the United States, including smart speakers and wireless headsets, have brought more than $ 2 billion in tariff costs to the United States.

The market generally expects that the increase in tariffs will push up prices, and that tariff pressure will be transferred to consumers and retail companies, which runs counter to last year's US government officials' statement that "China will pay for this."

Reuters quoted a research report released by New York Fed researchers on the 25th that the price of Chinese exports to the United States was almost unchanged, and US companies and consumers are estimated to bear about $ 40 billion in tariff costs each year.

Relevant US companies have always been opposed to the tariff increase.

On June 13, 661 U.S. companies, including Wal-Mart, Costco, Target, and Levis, jointly wrote to the White House, urging the United States to return to the economic and trade negotiation table to prevent further escalation in tariff issues.

This open letter quotes data from a U.S. think tank global trading partner consulting company that shows that if the U.S. tariffs on US $ 300 billion worth of Chinese exports to the United States are raised to 25%, and the tariffs that are currently in effect, it will make 2 million Americans unemployed. The average household will increase spending by $ 2,000 per year; US GDP will fall by 1%.

In addition, the letter reads, "substantial adjustment of tariffs is not an effective method. Tariffs are paid by American companies, not China."

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Iris Liang
SEKO Machinery & Technology Co., Ltd
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