The Trade War rages on | Source: Adobe Stock

One of the major headaches of 2019 and 2020 is showing signs of a comeback: the trade war between the U.S. and China.

Following years of on-again-off-again tariff threats from both countries — some of which did have a negative impact on the toy industry — the Phase One Trade Agreement was signed in January 2020 signaling a cooling between parties. At the time, then-President Donald J. Trump and the Office of the United States Trade Representative hailed it as a “historic and enforceable agreement” that required structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.

Now, the Biden administration has sparked new concern that it’s continuing the arguably adversarial nature of the last administration. Yesterday, U.S. Trade Representative Katherine Tai detailed potential steps that the U.S. may take in dealing with China following allegations that the country has not lived up to the purchasing agreements laid forth in the Phase One agreement. According to the New York Times, that may be as much as 30% this year.

One potential tool at the administration’s disposal: more tariffs on goods imported to the U.S. from China.

The prospect drew an immediate response from the National Retail Federation (NRF) with concern for the wellbeing of American businesses and consumers.

“American businesses across the country continue to be severely impacted by the tariffs put into place by the previous administration,” says NRF Senior Vice President of Government Relations David French. “Today’s long-awaited announcement proved the Biden administration’s trade strategy on China to be lackluster at most, and will further inflict unnecessary damage to the American economy and retail supply chains.”

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At the center of the concern is that tariffs are generally passed onto consumers, resulting in more money spent by families, and this could potentially add to an already challenging year that’s been plagued by the global supply chain crisis and above-average inflation here in the U.S.

“The continuation of these harmful tariffs worsens the challenges thousands of retailers must navigate, especially at a time when many are only beginning to emerge from the serious economic damage they have suffered as a result of the global pandemic,” French says. “Because these tariffs touch products in nearly every sector of the U.S. economy, they also ultimately force consumers to pay higher prices. It is critical the administration initiate immediate discussions with China so we can level the international playing field and bring an end to the global supply chain disruption.”

As always, the Toy Book will continue to monitor developments in global trade and their potential impact on the industry.