A longtime and well-respected former executive of some of America’s most popular retail companies is putting out a firestorm of concern about tariffs putting more pressure on consumer prices.
“They’re not going to go up 10 to 15 or 20% in price,” Gerald Storch – previous executive at Toys”R”Us and Target – said on “Varney & Co.” Tuesday. “I think this whole thing with the tariffs is grossly exaggerated by a factor of at least two.”
“I think people are hysterical. It’s not nearly the magnitude of what they’re talking about,” he added.
On April 2, the Trump administration will implement reciprocal import tariffs that reflect U.S. trading partners’ own rates. Details of the plan are still being worked out, one White House official told Reuters last week.
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A 25% tariff rate has already been pitched for Canada and Mexico, and a flat-rate 20% tariff on all Chinese imports went into effect earlier this month. President Donald Trump also announced on Monday that any country that purchases Venezuelan oil or gas would be subject to a 25% tariff on U.S. trade.
Economists traditionally believe that tariffs raise the prices consumers pay for imported goods and parts, contribute to inflation and make domestic manufacturers less competitive on a global scale.
But according to Storch, any impact from tariffs will be felt in the cost of the good, not in its retail price.
“You put a tariff on the cost of the goods at 20%, doesn’t mean the retail price goes up by 20%,” the CEO said. “Additionally, when they put tariffs on toys back in the first Trump administration, the studies show 87% of the increase was borne by the Chinese manufacturers.”
“China has a huge toy industry, and they have everything to gain and nothing to lose by keeping the sale rather than have it moved to America like a lot of it will do… there are substitute products, products that you can sell that are made in the U.S.,” he pointed out. “You can promote those.”
Major retail companies “are going to do just fine no matter what happens,” Storch also claimed.
“If they have to pass on a cost increase, they all will at the same time. And so prices will go up, their costs won’t go up in terms of labor and rent and things like that, proportionately, and they are going to do just fine,” Storch said. “But I don’t think it’s going to go up [by] nearly as much as people say, for all the reasons just outlined.”
“Meanwhile, if it starts to do that, keep in mind that President Trump and his group, they can change. They’ve shown they’ll do that. They can be flexible and not do anything that’s really damaging.”
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