US consumers will pay the price for Trump tariffs, former Saks CEO says
The latest round of proposed tariffs on Chinese goods could lead to a $40 billion loss in sales and the closure of 12,000 retail stores, according to a report by UBS.
Former Saks Chairman and CEO Steve Sadove told FOX Business’ Neil Cavuto that the tariffs are already driving up prices for consumers.
“If [tariffs] were to come about, the next phase on $300 billion of goods could have a material effect on the consumer which has been healthy, continuing to grow,” he said on Monday.
Earlier this month, the Trump administration increased tariffs on $200 billion of Chinese goods from 10 percent to 25 percent in addition to the U.S. tariffs already levied on $250 billion of Chinese exports. President Trump also threatened to impose new tariffs on an additional $325 billion worth of products.
Sadove, a Mastercard senior advisor, said low-end retailers and supply chains have absorbed much of the tariff load. However, he warns that major retailers such as Macy’s and Walmart have indicated that a 25 percent increase on apparel, footwear, and toys will be passed on to consumers.
“So if you see a 10 percent increase on a pair of shoes, for example, a lower price pair of shoes, that consumer will be affected,” Sandove said.
According to Sandove, the luxury consumer has seen a bigger slowdown caused by the volatility of the markets.
“As you get these potential tariffs and you see market volatility, the high-end consumer starts to react,” he said.
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Sandove is concerned that a price increase on U.S. consumer goods will negate some of the benefits of the Trump tax reform.
“Tax reform was enormously helpful for the growth on the part of the consumer,” he said. “This could wipe it out.”