“I’ll take your BMW and raise you a new bike.  OK, I’ll raise you a steel.  I’ll raise that a soybean.  I’ll call.”  The poker game of international trade between the U.S, and China rolls merrily along with the most recent raise bigger than ever.  Caught up in this poker game are the American consumer and retailer.  Consumer spending makes up approximately 70% of the U.S. economy, and the economy is beginning to slow down – slowly, but still a reality.

JPMorgan Chase estimates that the American family will absorb another $1,000 in annual costs as a result of Chinese tariffs after the coming 10% levies take hold.  If the upcoming tariffs are raised to 25% as the president proposed most recently (may have changed by the time you read this), that number could creep up toward $1,500.  Where is the consumer going to decrease or stop their spending?   Retailers?  Restaurants? Clothes?  Shoes?  More?  There are going to be retailers that suffer which we are seeing already and it could get worse – death by a thousand cuts.  Tariffs are raising retailers’ costs on some items.  The consumer may have less to spend.  Not exactly a pleasant thought.

Christmas is right around the corner.  There are as of today only 119 shopping days ‘til Christmas.  Pretty soon “Jingle Bells” will begin to leak out of stores’ sound systems.  Consumers are spending like mad, and no matter what happens between the U.S. and China between now and then they are going to keep spending right through Christmas Eve.  But what happens after Christmas?  What happens to products totally made in China or ones where parts of them (like bikes) are made in China?

It could be a bumpy ride.  Retailers, fasten your seat belts.

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