Well, the week ended with a big bang. Early Friday, President Trump announced on social media that the latest tariff talks with the PRC had broken down for various reasons and that he would be taking punitive action against China for failing to live up to their end of the bargain. According to his post, Trump would impose a further 100% tariff increase on China, purportedly to take effect on November 1st or perhaps sooner if he decides to play hard ball with the Chinese delegation. Needless to say, Trump was supposed to meet with President Xi of China in South Korea later this month, to discuss matters and hopefully bring a resolution to this trade war. In a separate matter, the US Supreme Court isn’t set to take up the matter of tariffs until November, which is far too late for most manufacturers, distributors, and retailers to take action for the upcoming holiday season.
There was a number of Chinese-made products expected to arrive in early November, which are obviously now affected by the recent rash decision by the Trump Administration to increase the tariffs to unassailable levels. Right now, we are in a quandary as to what to do, and waiting to hear back from our suppliers to see if further adjustments are warranted regarding both dates of availability and pricing. Its entirely possibly that these goods won’t even make it to our shores for the holiday season and could be placed on indefinite hiatus until something is worked out between the world’s two largest economies. Obviously, we can no longer guarantee pricing or release dates for said items and its entirely possible that these products will never materialize now or ever.
As the holidays approach, we strongly recommend that you place your orders for only those items marked as already being in-stock rather than pin your hopes on products slated for arrival in either November or December. To reiterate, the manufacturers that are affected by these increased tariffs include Air Force 1, Calibre Wings, Corgi, Dragon, Forces of Valor (Waltersons), Legion and Panzerkampf. Many of the remaining manufacturers we deal with are still affected by the original tariffs, so there is no guarantee that they are free-and-clear of these added tariffs either, particularly if the Trump Administration feels the need to impose across-the-board changes to their “Liberation Day” plans. We certainly don’t want to disappoint, but hope you understand that these circumstances are completely out-of-our-control.
In response to his threats, China, on Sunday, has vowed countermeasures against Washington if US President Donald Trump makes good on his threat to impose new 100% tariffs on Chinese imports.
Trump’s latest threat came after China unleashed a raft of export restrictions on rare earth minerals last week. The escalating tensions threaten to derail months of progress in trade talks.
“Resorting to threats of high tariffs is not the right way to engage with China,” a Ministry of Commerce spokesperson said Sunday, in Beijing’s first comments on the threat.
“If the US persists in acting unilaterally, China will resolutely take corresponding measures to safeguard its legitimate rights and interests,” the spokesperson added. “Our position on a tariff war remains consistent – we do not want one, but we are not afraid of one.”
From a business standpoint, we are entering the holiday season with the leanest inventory level we’ve ever seen in our twenty five years of existence. While our balance sheet is pristine and our credit rating has never been higher, we’ve had to raise the prices on many newly-received items in compliance with the MAP policies our distributors have had to implement and enforce due to the Trump tariffs. Additionally, many of the items we had expected to take possession of in the fourth quarter have either been delayed, cancelled or pushed back indefinitely, making it increasingly difficult to replace out-of-stock merchandise with fresh inventory. Consider too that we pared back our purchases largely because we weren’t sure what effect the Trump tariffs would have on end-user demands. Lastly, many customers are keenly aware of these collective issues and have shopped early for the holidays, recognizing that many items they had hoped to purchase won’t be available or may be negatively price-adjusted to take into account these escalating tariffs. All of this has accelerated sales, making it harder to keep product in-stock while the eye wall of the holiday shopping season approaches. Once again, food for thought if you plan on ordering something this holiday season that may or may not arrive.