Low-Income Consumers Will Bear the Brunt of More Tariffs: Munchin Meets Walmart

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US low-income consumers will feel the most pain of the next round of tariffs. Munchin met with Walmart's CFO to discuss.

Trump's next round of tariffs on China will hit things like diapers, strollers, infant formula, and children's products in general.

To alleviate concerns, Mnuchin says he’s talked to Walmart.

The U.S. recently raised the tariffs it had applied to roughly $200 billion of Chinese goods to 25% from 10% and has proposed a 25% tariff on the remaining $300 billion of Chinese goods not yet subject to those levies.

Responding to Rep. Ben McAdams, a Utah Democrat who pointed out that his state leads the nation in children per household, Mnuchin replied that he’s talked on the phone with Walmart’s — Brett Biggs, though Mnuchin didn’t name him — to find out what things the company can source from other areas and what they can’t.

“We haven’t made any decisions yet but we will be especially sensitive to the consumer items,” Mnuchin said. The Treasury secretary said there will an exclusion process if there are any additional tariffs and said a decision on those additional tariffs will be made in 30 to 45 days.

Weakening Yuan

From the February 2018 low until May of 2019, the Yuan fell 9.6% vs the US dollar. That mitigated much of Trump's 10% tariffs on Chinese goods.

The next 25% will be much more painful, and it will fall directly on US consumers with lower-income groups suffering the most pain.

Not to Worry

Trump loves collecting big tariffs.​

Tax Hike on the Poor

Note that Big Tariffs Equate to Largest Tax Increase Since 1993

Rare Earths

China produces 80% of the world's rare earth elements. They are used in weapons, cell phones, hybrid cars, and magnets.

And as Trump ponders still more tariffs, in retaliatory trade hardball, China Threatens to Cut Off US Supply of Rare Earth Elements.

Who Will Win the Trade War?

So, Who Will Win the Trade War?

Some say China, others say Trump.

Steve Bannon, former White House chief strategist, says the result will be win-win.

The correct answer is nobody, click for discussion.

Mike "Mish" Shedlock

Comments (39)
No. 1-13
Menaquinone
Menaquinone

Minimum wage burger flippers vote solidly Dimocrat and are unlikely to change. Inflation makes the US minimum wage more competitive to repatriation of manufacturing jobs. President Trump hit the bull's eye again.

2banana
2banana

Funny how the press and democrats could have cared less when ""low income consumers" beared the brunt of higher costs for:

Higher energy costs through Green Energy obamacare More insane and powerful public unions Higher housing costs through QE, bailouts and ZIRP Higher rental cost through QE, bailouts and ZIRP Higher electric costs through closing coal plants Higher taxes on cell phones and internet usage Higher property taxes to pay for insane public union pensions More and more regulations on every facet of life Etc.

Here is the thing about tariffs.

  1. You can choose NOT to pay them. Don't buy Chinese made junk.
  2. They eventually will go away be greatly reduced one day. Unlike taxes which only go in one direction.
mark0f0
mark0f0

When inflation hits poor people is typically when the violence starts... Note that we've mostly been in deflation for the past decade, and there's been plenty of EBT and big government welfare to go around. Hence falling violence, except Chicago and Baltimore.

TheGreatMiginty
TheGreatMiginty

Business will migrate to other non tax countries. Time to let other countries experience the growth China has enjoyed. Philippines Vietnam Cambodia Korea's Japan can take over easy and fast.

ksdude
ksdude

Damn it there go my harbor freight trips! Dont lecture me on quality hf has their place for certain things.

Sechel
Sechel

Yesterday there was a story about food , garlic in particular. If food prices go up to u.s. consumers because we lose cheap imports that's basically a regressive tax since food is a much larger percentage of low income wage earners budget than the wealthy.

Sechel
Sechel

Walmart will source from Vietnam. Those Walmart sneakers will not be coming from U.S. factories any time soon. Consumers won't pay and there is no pool of workers for such jobs. Wages in China were already going up and this shift was occurring but there are still tons of products being purchased from China. The problem is that Walmart can't shift where they source product this quickly and on the scale needed to avoid disruption

RonJ
RonJ

"Who Will Win the Trade War?"

Who won the closure of 60,000 American factories? Nothing happens in a vacuum. The suicide rate increased 24% in Ohio as it de-industrialized. What happened to the Peavey factory workers featured on Undercover Boss, after the company closed the factory and moved production out of country? The loss of a factory can be devistating for a small community, where it is a major employer.

Yes, we have gotten cheaper goods, but what has been the cost across society?

KidHorn
KidHorn

When I go to Walmart, it seems most purchases are for food and household items like shampoo and soap. I would guess less than 10% of what people buy comes from China. It will hurt low income households a little, but nothing to be alarmed about.

JonSellers
JonSellers

If Walmart could get away with raising prices on their items, why haven't they already? Are they a bunch of socialists?

The tariffs will impact corporate profits first, not consumer prices. Which is why Congress cares about this.

HubbaBuba2
HubbaBuba2

Geez, consumers pay while farmers get welfare checks based on where they live (not even their crops or anything really loss based!). "WASHINGTON (Reuters) - The U.S. Department of Agriculture said on Thursday that farmers will receive $14.5 billion in direct payments as part of a $16 billion aid package designed to offset the financial pain from trade disputes with China and other nations.

Farmers will receive the first direct payment in July or August, with subsequent payments planned for late fall and early 2020, the USDA said. The payments will be based on the counties in which farmers live, not by crop, according to the agency.."

Quatloo
Quatloo

“Trump's next round of tariffs on China will hit things like diapers, strollers, infant formula, and children's products in general.

To alleviate concerns, Mnuchin says he’s talked to Walmart.”

A real man of the people, that Mnuchin. He wants to know about their hardship...and who would know more about the pain of the common man than the WalMart CFO?!

ReadyKilowatt
ReadyKilowatt

Why would anyone in the US ever buy new baby supplies? There has to be a glut of used stuff out there, what with 1.7 kids per household. Unless strollers are designed to only last the two years or so before the kid starts walking...