Sunday, May 26, 2019

ANALYST: Trump's China Tariffs Could Trigger 12,000 Store Closures

Higher tariffs on Chinese goods could force 12,000 stores to close within a year and put more than $40 billion of sales at risk, the UBS analyst Jay Sole writes in a research note, reports Business Insider.

"The market is not realizing how much brick-and-mortar retail is incrementally struggling and how new 25% tariffs could force widespread store closures," Sole wrote.

I have already discussed in a video the complex nature of how tariffs impact an economy. It's not as simple as "retailers will just increase prices" or "manufacturers will absorb the costs."

To get technical about it, it depends on the profit margins of the various firms from production to retailer plus the price elasticity of the various goods.

To keep things simple, I didn't specifically discuss retailers in the below clip but the framework I present should help you understand how the retailers could get squeezed in some cases if consumer sales change significantly with price increases and the manufacturing profit margins are tight so that tariff charges cannot be absorbed from that end.


(ht Martin Hill)



  1. In related news, during last weekend's press conference while in Japan, the stable genius repeated the lie that American consumers are not paying the tariffs. When asked the question, he claimed that "I don't believe that China can continue to pay these really hundreds of billions of dollars in tariffs," he said.

  2. Just like the Idiot in chief has already hollowed out the middle class, he will also throw gasoline on ongoing retail apocalypse.