US retailers still jittery despite deal

The US National Retail Federation, or NRF, which represents the biggest providers of private-sector jobs in the country, said it is a "positive signal" that Washington and Beijing have reached a phase one trade deal, which holds off a planned tariff increase on billions of dollars in Chinese imports.

The administration of US President Donald Trump has agreed to delay a plan to impose tariffs on about $160 billion in Chinese-made consumer goods that include laptops, cellphones, certain items of toys, footwear and clothing, and halve the tariffs imposed in September on a further $112 billion in goods, to a rate of 7.5 percent.

"This is a good signal. What I'm going to wait and see is how it all kind of transpires," Jack Kleinhenz, the NRF's chief economist, said at a news conference on Tuesday.

"The delay in the recent tariff imposition is great for the consumers and good for retailers, but we still have a far piece to go."

Jonathan Gold, vice-president for the NRF's supply chain and customs policy, said the retail sector－providing the most private-sector jobs in the US－contributes $2.6 trillion to the country's annual GDP and supports one in four jobs, at 42 million Americans. The health of the sector acts as barometer for the nation's economy, Gold said.

"We haven't removed tariffs on goods, we just have delayed or deferred, not having additional ones," Kleinhenz said. "So we're still in a position where we have to face the fact that it is a tax, and ultimately consumers will have to deal with it in their wallets."

Under the phase one trade deal, the 25 percent import taxes on $250 billion in Chinese goods that started last year remain intact.

Kleinhenz said that to some degree, large firms in the US can absorb some of the tariff increases that have occurred in 2019 by pushing the costs back on to suppliers or absorbing some of them and reducing their margins.

But there are tens of thousands of smaller businesses in the retail sector that are getting "probably the broadside effect" of the tariff hikes, as they don't have the scale and scope that larger firms have to be able to adjust to the situation.

"I think it's still a relative risk going into 2020. We aren't putting a forecast out yet, but I think it has the impact of modulating consumer spending to a degree going into 2020 and the overall economy," Kleinhenz said.

Still, the federation predicted that Super Saturday, the last Saturday before Christmas, will continue to be the biggest shopping day of the year with an estimated 147.8 million US consumers expected to participate, up from 134.3 million last year, according to an annual survey released by NRF and Prosper Insights& Analytics on Tuesday.

Since the trade tensions between the world's two largest economies flared up early last year, the NRF has been consistent in combating tariffs by highlighting the negative consequences of tariffs through its testimonies, advertisements or statements.

After the announcement of the phase one deal between China and the US, the NRF said that for the first time in months, the two countries were moving in the right direction on tariffs.

"Tariffs create uncertainty and costs for American retail supply chains, and the trade war won't be over until they are eliminated completely," NRF Senior Vice-President for Government Relations David French said in a statement.

"We agree that we need to realign our relationship with China, but tariffs that harm American businesses, workers and consumers are not the answer and cannot be allowed to continue," he said.