THE 2018 CHRISTMAS IN RETAILING: tariffs

It’s anticipated that retailers will experience an excellent Christmas season this year – with the economy going strong and benefits of the recent tax cuts in their pockets, consumers are expected to step out with the confidence to spend freely during the upcoming holidays.

And, retailers, for their part have been working industriously to bring improvements to their operations in order to make things work better for both their companies and their customers.  They have worked to diminish their inventories, for the most part, and have devised a better supply chain arrangement with improved technological advances to make all that work well together – all those moving parts.  And they have brought improvements to staffing and training.  However, some of the few “flies in the ointment,” so to speak, are those that are the result of attempts to avoid the higher tariffs on Chinese goods that will be imposed beginning in January of 2019.  In January, there will be a 25% tariff imposed on some goods – and to good effect – the tariffs are meant to “teach China ‘sooey’,” as the folks in Texas would say.  The word “Sooey” always meant giving anyone “what for” in order to cause them to change their errant ways.  In this case, it’s the great trade imbalance that’s been enjoyed for decades by the Chinese.    In order to get a “jump” on the tariffs, some merchants have purchased additional inventories of goods they normally import from China, stocking up before the tariffs go into effect.  Thus, they are currently burdened by these inventories.  I’d say there are two solutions to this kind of problem: 1 – Stop buying Chinese goods; and, rather, focus on American-made goods.  If those don’t currently exist, then work to foster enterprising manufacturing activities that can take up the slack in the U.S. and provide the needed goods; and/or 2 – The merchants can have lots of Christmas season sales, in order to reduce inventory levels.  Both ideas sound like winners – the nation could use the additional advantage of having superb sales that are held before Christmas; and there’s a distinct advantage of having those companies who need the sort of goods currently produced in China to bring those activities back home and assist in helping out enterprising individuals in home-based businesses around the country to set up operations and marketing plans to provide those goods. All could work very well – and in the true spirit of Christmas.

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