The announcement that the Trump administration is imposing 25% tariffs on Canada and Mexico, and 10% tariffs on China is a "serious step", with further negotiations needed to ensure that consumers, workers and small businesses don't bear the brunt, the National Retail Federation (NRF) has said.
The NRF, which represents the US retail sector – which combined contributes $5.3 trillion to annual GDP and supports more than one in four US jobs – said that while it supports the Trump administration's goal of "strengthening trade relationships and creating fair and favourable terms for America", imposing steep tariffs on key trading partners is not an optimal solution.
'Continue Negotiating'
"We strongly encourage all parties to continue negotiating to find solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses," commented NRF executive vice president of government relations, David French.
“The retail industry is committed to working with President Trump and his administration to achieve his campaign promises, including strengthening the US economy, extending his successful Tax Cuts and Jobs Act, and ensuring that American families are protected from higher costs," French added.
Trump himself has acknowledged that the tariffs could bring "short-term" pain for American consumers, while some Republicans have voiced concerns over his decision.
Analyst Comment
Elsewhere, commenting on the tariffs, Russ Mould, investment director at AJ Bell, said, “The prospect of a full-blown trade war has spooked investors as they weigh up the prospect of widespread retaliation by countries on the receiving end of Donald Trump’s tariff frenzy.
“Affected countries aren’t going to take the hit lying down and a tit-for-tat scenario is now looking real. That could result in higher inflation and put a stop to further interest rate cuts for the time being – exactly the opposite of what equity investors want to happen.
“Higher prices could hurt demand, and there might be a trickle-down effect that knocks business and consumer confidence and feeds into weaker economic activity.
