The latest developments from the trade war front

Developments in the China trade war have been unfolding
rapidly over the last few weeks, so I thought It would be an excellent time to
reexamine the current state of affairs. Retailers have been bracing for some
time now for the List 4 tariffs, slated to take effect September 1st this
round, in particular, has caused some sleepless nights for many a CEO in the
retail world. The List 4 goods cover a wide array of Chinese imports that are
almost exclusively consumer-driven products. Items covered by the list range
from high tech gadgets like cell phones to low tech basics such as apparel,
footwear, accessories, and home goods. What probably caused the most
consternation with leading retail brands in the US was the incredibly poor
timing. September is the beginning of the crucial 4th quarter in retail, and
price increases in the form of tariffs at this time of year could cut deeply
into consumer spending. Pressure rapidly mounted on the US administration to
postpone or cancel these proposed tariffs. In the end the administration
relented and decided to delay the List 4 goods until December 15th to avoid any
potential negative impact on holiday spending. What’s the takeaway here? It’s a
temporary stay of execution for the retail world, the effects of the next round
of tariffs will now not be felt until early spring of 2020. Hopefully, by that
time, more significant progress will have been made in resolving the current
state of the US and China’s trade dispute.

Let’s now turn to independent retailers like our readers and
see how this will shape your 4th quarter. With the tariff treat off the board
until the end of the year this may calm a somewhat anxious consumer and keep
them shopping like they were in 2017 and 18 when consumer confidence was at
all-time highs. There’s a strong likelihood that as this new December 15th
deadline approaches, consumers may do just a bit more self-gifting this year to
avoid potentially higher costs after the new deadline passes so expect sales to
stay strong throughout December. If the trade dispute is not resolved by the
end of the year, plan on stocking up in December for the first four months of
2020. You can thank me later when you realize just how much more attractive
your goods from look to a consumer who’s shopping after the
tariff’s take effect. 

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