The US-China trade war broke out on July 6. The U.S. initially imposed a set of 25% tariffs on 818 items worth about $34 billion on that day. The fermented bean curd in some Chinese stores in San Francisco’s Chinatown has reportedly become more expensive already. Some stores chose to stop shipping and took a wait-and-see attitude.
In a world of international trade, whether you live in Los Angeles, San Francisco, New York, Chicago or Atlanta, you will find Chinese supermarkets as long as there is a huge Chinese population. With the exception of fresh produce, most of the food and groceries in these markets come from Mainland China, Taiwan, Hong Kong, Thailand and Vietnam. The varieties even top those in our homeland. They are cheap but in good quality. There are plenty of brands to choose from.
The overseas Chinese are very lucky.
All that could change, however, thanks to the trade war. The targeted $34 billion goods on the initial list are primarily industrial equipment and parts, along with some home products such as computer and its peripheral equipment. Washing machines and LED light bulbs are also on the list. Apparels, food and groceries are not among the targets – yet.
According to media reports, some Chinese stores are starting to hoard the inventory and stop some food shipping. In San Francisco, the price of pho in the Chinese restaurants has gone up to $12 per bowl from $10 per bowl. Is it happening in Southern California? We have not seen any report. If a business charges more to take advantage of a trade war, it is uncalled for. The consumers should boycott them.
Why? First, the products which are imposed tariff by the Trump administration have not yet included food or processed food such as pho and fermented bean curd. Nor do they include groceries. If a store raises prices based on this excuse, that is looting. Secondly, even if some appliances may become the targets of the 25% tariff, the new tariff only takes effect after July 6. Most of them have not cleared the custom. Supposedly the store’s existing inventory has not been taxed on the new rate. How dare they raise the price?
The more plausible explanation for these reports is that the offending stores are gouging the customers in the name of a trade war. For example, the pho has nothing to with the trade war. The restaurant owner wanted to raise the price and used this occasion to fool the customers. The blindsided customers paid as asked and became victims.
Donald Trump started the trade war ostensibly to reduce the trade deficit with China but ends up dragging all the American consumers along to pay the price and bear the brunt of the cost from increased tariff. Right now the American economy is still holding up. The two major parties are united by the rational of impeding China and do not care about the fate of American consumers. They are hoping the American importers have no choice but to purchase goods from other low cost manufacturing nations such as Vietnam and Indonesia so as to force China’s hand and make them yield.
If China remains unmoved, Trump is ready to follow up with tariff increase on products worth $20 billion. This list involves more than 6000 products, including seafood, fruits, vegetables, cotton, wool, raincoats and baseball gloves. If China still refuses to yield, another $20 billion products are waiting in the wing. The worst scenario would be more tariff on all Chinese imports worth more than $550 billion. When that day comes, the cost of food, apparels, groceries in Chinese supermarkets and stores will increase between 10% and 25%. If it comes down to this, our daily spending is bound to get impacted. Retail prices will also increase.
Fortunately, many consumer goods supplied to stores in the Asian community have multiple sources such as Taiwan and Hong Kong, which are unaffected by the trade war. The quality of many apparel and groceries are no less than the Chinese made. Since China relies heavily on exports and international trade, if the trade war goes along like this, perhaps they will yield for fear that their markets falling into other hands. The consumers, however, will pay the price. Under such a situation, consumers should watch out when out shopping so as not to fall victim to the scheme.