Who Will Suffer Most from Tariffs?

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Former Toys R Us C.E.O., Jerry Storch, gave an interview to Fox Business News last week in which he minimized the impact of the tariffs set to go into effect on September 1. Jerry is a. highly intelligent businessman, so I pay attention when he speaks. The interview, "Tariffs won't impact consumers: former Toys 'R' Us CEO says," quotes Jerry as saying: "There is no way that the impact of these tariffs will be that substantial on the average American consumer."

He then went on to say: "…enacting tariffs on $300 billion in goods out of a $14 trillion consumer economy isn't worrying him. He said the consumers' pain if they feel any at all, will be "more like a little pinch if anything at all."

As I thought about his comments, a question occurred to me: "Who is the average American consumer?" It certainly isn't the person who lives below the poverty line. According to the U.S. Census Bureau, "In 2017, there were 39.7 million people in poverty."

39.7 million does not include those above the poverty line who live paycheck to paycheck. Research by the Charles Schwab Corporation asserts that "…three in five Americans live paycheck to paycheck". Based upon a U.S. population of 327 million people, that means that 196 million Americans are just getting by. It is these people who are going to feel any increase in consumer prices, and it will not feel like a pinch. It is going to hurt.

The coming 10% tariff will impact not just toys but virtually all consumer goods. The cumulative effect is going to mean that a large percentage of our consumers are going to have to make tough choices about what and how much they buy. 

 

3 thoughts

  1. Jerry should be a bit more sensitive and also think about the subject from a 360’ perspective. Of course at some point the consumer will see higher prices and if you buy clothes, toys, lap tops and a ton of other product you will pay more and given the average American has less than $500 in the bank!
    Jerry for Christ sake coming off the collapse of your old company, Toys R Us last year, think about the companies that depend upon making goods in China like toys. We are the ones that have to eat the tariffs and take the hit to the bottom lines. Easy to sit on the sidelines. Get back in the game and you will see who this really hurts. If you were back in retail you would be talking out of the other side of your mouth on this subject.

  2. Thanks Richard – as always, you have created an intriguing conversation and one that I feel needs comment, as I’m sure others will as well. I’ve never met Mr. Storch but I’m confident that he is a highly intelligent businessman. From these comments, it just appears that he is out-of-touch with the average US consumer…a pattern perhaps?

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