While U.S. ports handle record-setting volume, retailers fear higher tariffs on foreign-made goods proposed by former President Donald Trump could blunt soaring consumer spending.
The Republican presidential nominee has made tariffs a central issue during his campaign, saying he would use them as an economic weapon to protect U.S. industry from lesser-priced goods chiefly made in China.
At the same time, Trump claims that the U.S. would bank billions of dollars in revenue from exporting countries paying those tariffs — a fundamental misunderstanding of how they work, say analysts and importers.
“Tariffs are paid by the importer and not the producing country, and that is passed on to the consumer. It’s a tax paid by the consumer,” said Matt Shay, chief executive of the Washington-based National Retail Federation, the largest U.S. retail trade group. “Tariffs can be a useful temporary tool during trade negotiations, when used strategically and sparingly, to get benefits in a trade relationship.”
Shay quoted estimates by the Peterson Institute for International Economics and others that found existing import tariffs cost an estimated $1,500-$3,000 per household, but that that number would rise to an average of more than $4,000 under a second Trump administration.
Shay’s comments came during a video call Friday with Port of Los Angeles Executive Director Gene Seroka, who announced record third-quarter imports worth $955 billion moving through the busiest U.S. container gateway.
As retailers formulate their business plans for 2025, Shay said tariffs and other business-centric policy questions will have to wait for the election.
“Preserving pro-growth tax policy is a priority for us,” said Shay. “The 2017 tax act reduced corporate taxes from 35% to 21%. That is still higher but more in line with other OECD [Organisation for Economic Co-operation and Development] countries we trade with. It made the U.S. a much more competitive operating environment. Retailers had the opportunity to reinvest in their businesses instead of sending that money away as a tax. For many businesses, that was especially important for survival during the COVID pandemic. So that’s a big priority for us.”
The NRF earlier this month forecast end-of-year holiday retail sales 2.5%-3.5% higher than in 2023, equivalent to a record $979.5 billion-$989 billion in total spending in November and December and up from $955.6 billion a year ago.
Retailers expect no impact, Shay said, from the strike by members of the International Longshoremen’s Association union that briefly shut down container handling at East Coast ports in early October.
Importers had spent the summer frontloading shipments or rerouting cargo to the West Coast, to avoid potential delays from a strike, militia attacks on shipping in the Red Sea and congestion at Asian ports. As a result, most holiday retail merchandise is already at U.S. destinations, according to Shay.
“The strike cost as much as $5 billion a day [in delays], according to some estimates,” Shay said. “We expect imports at Los Angeles and ports around the world to be at elevated levels, but it will have no effect on holiday business.”
Shay credited acting Labor Secretary Julie Tsu and Lael Brainard, director of the National Economic Council, for their roles in helping to reopen the ports. The ILA and port employers represented by the United States Maritime Alliance (USMX) agreed to a 62% pay raise over the six years of a new master contract, and to extend the current pact through Jan. 15, 2025, while they return to negotiations on automation and other issues.
“We want to see USMX and the ILA reach a fair deal in place so we don’t have another interruption in service,” said Shay. “Automation is going to take additional time.”
Find more articles by Stuart Chirls here.
Related coverage:
Roaring volume has Port of Los Angeles eyeing $1 trillion in imports
