The U.S. and China have reached an agreement on “phase one” of a trade deal that calls for China to purchase more products from American farmers along with other exports. In return, the U.S. has put the brakes on new tariffs and agreed to reduce some existing levies, according to the Wall Street Journal.
The agreement comes just a few days after the National Retail Federation (NRF) and other members of the Americans for Free Trade coalition sent President Trump a letter asking that the new tariffs set to take effect on Dec. 15 be suspended.
The NRF letter called for “a final deal that not only addresses our key concerns with the U.S.-China trade relationship but also eliminates the current tariffs imposed on both goods sourced from China and our goods exported to the critically important China market.”
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“Tariffs create uncertainty and costs for American retail supply chains, and the trade war won’t be over until they are eliminated completely,” said David French, Senior Vice President for Government Relations of NRF in a statement. “We agree that we need to realign our relationship with China, but tariffs that harm American businesses, workers and consumers are not the answer and cannot be allowed to continue.”
For retailers, the talk of a trade deal between the U.S. and China has added uncertainty to the holiday season. Many retailers anticipated the potential price increases from the tariffs and opted to pre-buy inventory, according to CNN Business.
Two retailers in the same vertical, Dollar Tree and Dollar General, have had very different experiences with the trade war. While Dollar Tree predicts the trade war will weigh significantly on sales and expects tariffs to add $19 million to its costs of goods for Q4 2019, Dollar General’s outlook in the face of potential trade disruptions is more positive: the company expects that it will be able to mitigate, absorb or otherwise offset the impact of tariffs on goods from China. Dollar General will open 1,000 stores in 2020 after a successful Q3 that reported a net sales increase of 8.9% and a same-store sales increase of 4.6%.
