New tariffs taxing Chinese imports will cause an increase in the prices of various everyday goods. Products including clothing, technology, and food will all be affected. Retailers are attempting to alleviate some of the impacts, but American households are still expected to spend an extra $1,000 each year as a result of the tariffs.

A 15% tariff is being placed on $300 billion worth of imported goods from China. The tariff went into effect for a portion of the goods on Sept. 1 and will go into effect for the rest of the goods on Dec. 15. Imports taxed as a result of the Sept. 1 portion include shirts, pants, shoes, jackets, diapers, TVs, coffee, meats, cheeses, and books.

Although most stores will be forced to raise their prices in order to adapt to the tariffs, the price increases will not happen right away. Most manufacturers, retailers, and distributors have several weeks worth of products in their inventory. Many have even stocked up on goods that are being targeted by the tariffs in order to avoid paying higher prices for them later on. However, the extra stock will eventually run out, so prices are bound to rise. David French, the senior vice president for government affairs at the National Retail Federation, stated, “It’s impossible for businesses to plan for the future in this type of environment.”

Instead of raising prices, some manufacturers are making changes to absorb the impact of the tariffs. For example, items are now being made with lower quality materials and smaller packages. Other manufacturers have chosen to accept smaller profit margins or are looking to other countries for imports. “The supply chain can only absorb so much,” admitted French. Like retailers, supply “companies will have no choice but to eventually raise prices.”

According to the Union Bank of Switzerland, China supplies about 34% of products sold at Target, 26% of those sold at Walmart, and 20% of those sold at Costco. About 70% of shoes sold in the U.S. are imported from China.

Importing goods from other countries contributes to those countries’ economies. President Donald Trump intends to boost the U.S. economy and slow the growth of other countries through the tariffs, which are designed to encourage companies to import fewer goods from China, the U.S.’ economic rival, and manufacture more of their products in the U.S. As of now, President Trump has threatened to raise the tariffs from 15% to 25% in the next year.

Graphic courtesy of KIPLINGER.COM