Please consider Trump Tariff War with China Sends U.S. Retailers on Buying Binge.
In the nearly 40 years she has spent in trade, Amy Magnus has never seen retailers hoarding so much inventory.
Warehouses throughout the United States are at record capacity with Chinese imports of all kinds – microwaves, vacuum cleaner filters, swimwear, furniture – stacked to the ceiling, according to Magnus, who heads the National Customs Brokers & Forwarders Association of America, whose members work with over 250,000 importers and exporters.
“My office is right on a land border and I can see the trucks just coming across non-stop from my window,” Magnus said, referring to her birds-eye view from Champlain, New York, of trade on the border between Canada and the United States.
The buying binge is also evident in recent data from the National Retail Federation (NRF) and Hackett Associates, which show imports at major U.S. retail container ports surged 13.6 percent to a record 2.04 million containers in October. This helped push the U.S. trade deficit with China to a record high.
“It’s very rare that retailers would commit to more inventory in advance,” said Neil Saunders, managing director of consultancy GlobalData Retail. “If they don’t manage to sell their holiday inventory, we’ll see a real glut of it, and some discounting, in the new year.”
Storage is “full to bursting” as a result of retailers’ holiday inventory, plus the additional stocks retailers have been buying for 2019, Saunders said, and retailers are paying more for storage due to a shortage of warehousing across the country.
“Our warehouse is packed with stuff,” said Mike Abt, co-president of Chicago-based appliance and furniture store Abt Electronics. “Air-conditioners are just piled up in random places where they shouldn’t be because we’re running out of room. And we did that in anticipation of 15 percent more price increases.”
Interesting Impact
Trumps tariffs have caused imports to rise, increasing the deficit, just as the global economy, even the US economy is hitting the skids.
Not only is warehouse storage space at a premium, retailers will soon find a dearth of shoppers. Retailers are even piling up furniture and air conditioners “in random places”, smack in the midst of a housing bust.
US exports of soybeans and agricultural goods to China has plunged.
Yesterday I commented FedEx Warns of Global Slowdown: Expect More Warnings.
For icing on the cake please note Xi Address to China (and Trump): “No One Can Dictate to China”
Dear President Trump, is this winning?
Mike “Mish” Shedlock
And when the goods do not sell, price deflation…
It isn’t surprising that retailers/distributors would stock up in advance of the tariff . If they have, and it is anticipation of the tariff, I don’t expect there to be a lot of clearance sales. That would defeat the point of stocking up in the first place. Instead, I would expect them to be content to raise prices to reflect their new marginal cost, and allow this inventory to sell off at the regular pace, for an extra 15% profit. Alternately, they will raise prices, but not the full 15%, at least, not all at once.
What I do think we will see is a precipitous drop in orders from China, once the tariff takes effect. I don’t think that will be a surprise to China, and the complaints we hear from them are most likely not due to current conditions, but rather due to what they know is about to happen when the tariffs actually hit.
Yes, Chinese manufacturers should feel a sudden slowdown early in 2019. Some may not have a job after the Chinese New Years celebrtion is over.
If we are importing so much stuff, why is the Chinese/world economy not booming?
Most of the “Trump Tariffs” take effect on January 1, 2019.
So this “pile up” are importers rushing to get goods into America before the tariffs take place.
Thus – a bump in imports from China and warehouse space (in America) at a premium.
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“Trumps tariffs have caused imports to rise, increasing the deficit, just as the global economy, even the US economy is hitting the skids.”
I’m tired of this crap.