Trade tensions with China cast gloom over US holiday shopping season

Small players hit harder

Despite strong opposition, the US government imposed 15-percent additional tariffs on some $110 billion worth of Chinese imports, effective on Sept 1, covering a wide range of consumer goods including clothing, footwear, food and books. The United States also threatened to levy additional tariffs on other Chinese products including toys and electronics.

"Retailers are highly competitive, but the ability to compete has been challenging this year because of the uncertainty of the trade war and continued tariff escalation," said Jonathan Gold, Vice President of Supply Chain and Customs Policy at the National Retail Federation, in a statement earlier this month.

While big retailers such as Walmart and Target are able to stock up on months of inventory ahead of tariff increase, press suppliers to share the added cost, and diversify their global supply chain, hands are tied for some small retailers.

"Independent bookstores just don't have the space and the money to buy stock well in advance and warehouse it. So we are more likely to go with just-in-time inventory," said Jamie Fiocco, president of the American Booksellers Association, which represents some 2,000 independent brick-and-mortar booksellers nationwide.

Fiocco, who owns 15-person Flyleaf Books in Chapel Hill, North Carolina, told Xinhua recently that she is "worried" about the holiday season because additional tariffs on books imported from China could discourage publishers from reprinting and many books would run out of stock. "We will reorder, but at this point we reorder at the mercy of the publisher stock," she said.

The tariff impact also goes beyond the holiday season.

Brett Portaro, co-founder of Powercharge Corporation, a six-person startup, said the company's negotiations with a major US retailer on a potential large order are overshadowed by the latest round of tariffs on Chinese imports.

"We are still negotiating with them and the tariffs and the uncertainty have kept that deal in limbo," Portaro told Xinhua in a phone interview early this month. The North Carolina-based lithium ion cell phone accessory company mainly sells power banks manufactured by a partner in the southern Chinese city of Shenzhen.

"It has made our margins much slimmer," Portaro said, noting that moving forward, the additional tariffs would prevent his company from doing business. "The only ones that would be able to compete if the tariffs continue would be large providers because they're able to absorb the hit," he said.

Hoping for trade deal

According to the Fed survey, companies affected by the tariffs were more inclined to pass on cost increases. Business contacts in the Chicago Fed district reported that retail prices "increased modestly" and they expected prices to "rise at a somewhat faster pace" over the next 12 months.

"One contact said that food, home goods, and apparel retailers were struggling to pass on higher costs; in contrast, another contact noted that retailers continued to raise prices to reflect higher potential and realized tariffs," the survey said.

In September alone, American businesses and consumers paid 7.1 billion dollars in tariffs, up 59 percent year-on-year, said US anti-tariff advocacy group Tariffs Hurt the Heartland, which noted that the "significant increase" was primarily driven by tariffs implemented by the current US administration.

Kincun, the consumer, voiced hope that the United States and China can work out a trade deal in the near future. "It does not only impacts China and US, it impacts everyone else as well, because both of them are pretty big countries with big economy, so it impacts the world economy," he said.

On the ongoing US-China trade negotiations, Portaro said he is cautiously optimistic. "We are very encouraged that the tariffs have come to a standstill and hopeful that this will soon come to an end," said the startup co-founder.

A potential phase-one deal would have a positive effect on his business and on the industry as well, according to Portaro.

"We anxiously hope that both sides can come to an agreement," he said.