By Jeffry Bartash, MarketWatch
White House aims to limit price hikes on popular consumer goods
The Trump administration said it will delay imposing import tariffs on popular electronic goods such as iPhones, Xboxes and laptops that are made in China on the same day the government reported the biggest increase ever in the price of computers.
A 10% tariff was set to take effect on September on an additional $300 billion in Chinese imports that included many consumer products omitted from earlier round of U.S. duties. For the first time cell phones, computers and video-game consoles would have been subject to the tariffs.
Now those tariffs will be delayed until Dec. 15, the Office of the U.S. Trade Representative said Tuesday (). The U.S. is also exempting certain toys, clothing and footwear until shortly before Christmas.
The White House had been under pressure from Silicon Valley to delay or rescind the tariffs, with companies saying they would have to raise prices before the holiday shopping season.
President Trump originally announced the extra tariffs on Aug. 1 for implementation on Sept. 1, but on Tuesday the president told reporters he supported the delay to protect American shoppers, tacitly acknowledging that tariffs can lead to higher prices on consumers. The White House has previously insisted that the cost of tariffs was mostly borne by Chinese suppliers.
After a series of steep losses in recent days, the U.S. stock market surged in Tuesday trades. The Dow Jones Industrial Average jumped as much as 500 points and the S&P 500 index soared. Shares of chipmakers and companies such as Apple (AAPL) also rocketed higher.
Earlier Tuesday, the government said the price of computers surged 2.8% in July, the single biggest monthly increase since the Bureau of Labor Statistics began keeping track in 2005.
Higher prices of popular consumer staples (have become a political lightning rod for President Trump as he gears up for re-election next year.
Until very recently, U.S. tariffs on Chinese goods fell most heavily on industrial products out of the public eye. The new duties announced by the President on Aug. 1 would have covered virtually every product coming from China.
Many consumer goods found in Best Buy (BBY) or on Amazon (AMZN) are made in China: cell phones, computers, video games, smart-home devices, televisions, stereos, speakers. China also manufacturers a lot of the toys and clothing sold in the United States.
It not entirely clear why the price of computers soared in July. Trump had threatened in June to apply tariffs to all imports from China, but he struck a deal with Chinese President Xi Jinping at the end of that month to allow more time for the two countries to negotiate a trade deal.
Angered at the lack of progress, Trump announced the extra tariffs on Aug. 1 to cover virtually all Chinese goods starting in September. Companies may have raised prices given their uncertainty over the White House strategy.
Even with the increase in prices in July, the cost of computers and related "information technology" products are still lower now than they were one year ago. The cost of these goods have declined 1.2% in the past year.
The cost of consumer electronics have fallen every year since the government began keeping track in the early 2000s.
-Jeffry Bartash; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
August 13, 2019 12:31 ET (16:31 GMT)
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