Monday, the proposed $250 billion in tariffs on over 6,000 categories of Chinese goods became reality. China promptly retaliated with a tariff on $60 billion worth of US imports.
With the holiday shopping season looming, it's still uncertain how much these tariffs will affect holiday sales, but also consumer perception and marketing campaigns.
Will we see tariff-related messaging and promotions from retailers? Not yet, though Joann Fabrics and Crafts made waves in August when it texted customers urging them to sign an anti-tariff petition.
Articles have been published urging US consumers to buy big ticket items like cars, appliances and flat-screen TVs (as well as umbrellas and sneakers) ahead of potential price increases. We expect tariffs will affect consumer electronics, apparel and furniture disproportionately.
Despite the uncertainty of the effect of tariffs, consumer sentiment has been strong. According to a monthly index published by the University of Michigan in September 2018, consumer sentiment was at the second-highest level since 2004. Concerns about tariffs negatively affecting the US economy were mentioned unprompted by roughly 30% of consumers surveyed in the past three months, up from 20% in the prior four months.
The potential effects of a trade war has been weighing more heavily on manufacturers and retailers. The US-China Business Council (UCSBC) surveyed its members in June 2018 and 73% of companies polled said they had been affected by trade tensions. Lost sales due to tariffs (13%), lost sales due to customer unease about supply (13%) and changing suppliers due to uncertainty of continued supply (11%) were among the results cited.