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E-mail Xinhua, April 6, 2025
BEIJING, April 6 (Xinhua) -- As the international market has been thrown into turmoil by Washington's latest tariff maneuvers, will U.S. businesses benefit? Hardly.
Imagine Emily, a six-year-old U.S. girl whose birthday joy dimmed as rising tariffs nudged her dream doll just out of her parents' budget. That would probably be an equally bitter reality for U.S. toymakers.
"The tariff is gonna affect us. It's gonna affect our customers, it's gonna affect retails. So it's scary," Suzy Brown, a representative from MasterPieces, a U.S. puzzle and games brand, told Xinhua in a recent interview. "We're now being hit by tariffs we didn't anticipate."
This U.S. industry is grappling with soaring costs and disruption. It is not just because most of its products, or raw materials and components, are sourced abroad, but also because tariffs are set to impact supply, demand and efficiency along the broader industrial chain.
And it is not just toys. Across multiple sectors, American businesses are feeling the squeeze of Washington's escalating tariff hikes. Far from protecting U.S. industries, the tariff measures will eventually burden them -- inflating costs, jeopardizing jobs, and eroding overall competitiveness.
"Though tariffs may produce some short-term effect in shielding certain U.S. industries, in the long run, they will likely make U.S. businesses less competitive, raise their costs, and undermine their innovation and efficiency," said Zhou Chao, a researcher at Anbound, an independent think tank in China.
In its latest move, the White House announced Wednesday a broad new set of so-called "reciprocal tariffs," imposing a 10-percent "minimum baseline tariff" and higher rates on certain trading partners.
This followed a series of fluctuating tariff decisions, such as announcing tax hikes on imports from Canada, Mexico, and China, postponing measures on Canada and Mexico, confirming tariffs on steel and aluminum, and introducing new tariffs on Chinese imports, sending both U.S. firms and global businesses on a policy rollercoaster of uncertainty.
The U.S. retail industry vividly illustrates these challenges. Heavily dependent on global supply chains to offer affordable products, retailers are now confronting significant pressures.
"A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter," said Jonathan Gold, vice president of supply chain and customs policy at the U.S. National Retail Federation, adding "this tax ultimately comes out of consumers' pockets through higher prices."
What hits retail shelves starts much earlier in the broader supply chain, where the manufacturing industry is particularly alarmed by the tariff hikes. U.S. factories depend significantly on imported raw materials and components, making these new tariff measures a serious threat to their competitiveness and stability.
"The stakes for manufacturers could not be higher," said Jay Timmons, president and CEO of the National Association of Manufacturers in an online statement on Wednesday, adding that "the high costs of new tariffs threaten investment, jobs, and supply chains."
Sarah Shrader, owner and co-founder of Bonsai Design in Colorado, voiced concern over the impact of rising tariffs on her business, according to the U.S. Chamber of Commerce. "We rely heavily on steel as well as industry-specific materials in the global marketplace," she said. "We are concerned that the price increase of our raw materials and goods will be prohibitive for us to sell our products in the U.S. market."
Even sourcing alternatively offers little relief. Grant Thornton, a major accounting firm, cautions that shifting supply chains to more tariff-friendly countries might incur requalification costs, capacity constraints, and quality concerns.
If history is any indication, though tariff hikes may offer short-term boosts for targeted domestic industries, they often result in broader economic loss down the road.
Take U.S. Section 232 tariffs on steel and aluminum, enacted in 2018, for instance. According to the Tax Foundation, an international think tank, these measures have driven up production costs for manufacturers, reduced employment in affected industries, raised consumer prices, and negatively impacted exports.
The foundation estimates that repealing the Section 232 tariffs and quotas would increase U.S. long-run GDP by 0.02 percent and create more than 4,000 jobs.
The economics behind the scene is clear: domestic producers of tariffed inputs, such as U.S. steel and aluminum manufacturers, have raised their own prices under the cover of tariffs. Manufacturers consuming these inputs face a tough choice: absorb costs or pass them onto customers, potentially reducing demand for finished goods like farm equipment, appliances, and construction machinery, said Grant Thornton in its report.
In tech sectors, the picture is even more complex. The Consumer Technology Association reported earlier this year that tariffs on electronics could slash U.S. consumer purchasing power by up to 143 billion U.S. dollars, with significant declines expected in laptop, tablet, gaming console, and smartphone sales.
Sean P. Murphy, executive vice president of policy at the Information Technology Industry Council, cautioned that such trade barriers raise costs, weaken America's AI development, and inject policy uncertainty into the country's innovation path.
Renowned U.S. economist Jeffrey Sachs, in a recent interview with Xinhua, criticized Washington's trade direction. "The United States is making a very serious mistake in its economic policy by turning protectionist," he said, adding that while China is opening up and promoting open-source technology models, the United States is going for a closed technology model.
Perhaps the most troubling, however, is the uncertainty that tariff turbulence injects into business planning across sectors in the United States. Repeated tariff threats and sudden policy reversals by the U.S. government have prompted caution and hesitation among businesses.
Grant Thornton emphasizes that "the turn to tariffs as standard policy is an unfamiliar situation after decades of emphasis on free trade and international supply chains," leading businesses to engage in significantly more detailed planning and develop robust contingency measures.
Already, U.S. manufacturers and importers have witnessed rising input costs in anticipation of tariffs. Steel prices, for example, jumped between 12 percent to 15 percent in February, according to Grant Thornton.
While U.S. companies navigate these volatile trade winds, juggling higher costs, revising supplier networks, and striving to keep prices manageable, the long-term economic burden of these trade policies could be even greater and is likely to deepen further.
The Organisation for Economic Co-operation and Development has already revised downward its forecasts for U.S. growth for 2025 and 2026, cautioning that these tariffs are beginning to take a broader economic toll.
"We are still assessing the macroeconomic implications of the announced tariff measures," said International Monetary Fund Managing Director Kristalina Georgieva in a statement on Thursday, "but they clearly represent a significant risk to the global outlook at a time of sluggish growth." Enditem
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