The trade war's real victims

The trade war's real victims
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While news of the trade war is everywhere, the talk of the damage it is doing focuses on the abstract, or on items far removed from us. We hear about big numbers, like the “global uncertainty” costing the economy $585 billion, or the Dow Jones dropping 800 points — but few people can wrap their arms around what those numbers mean. We might hear about the effect on farmers, but only 1.5 percent of Americans work in agriculture. Or maybe we hear about, as John Oliver noted, how tariffs will raise the price on motorized scooters (and, as Oliver put it, if raising the price on scooters is the only effect of the tariffs, that would be fine).

Taken together, it’s easy for the average American to simply ignore the effects of tariffs. Tariffs, it seems, hurt big companies or people they don’t (and never will) know — and, to the extent tariffs hurt anyone they do know, it’s someone buying an expensive toy, so it’s no big deal if they pay a little more.

Yet those are not the real victims of the trade war. The real victims are blue-collar, low and middle-income, everyday Americans. At CarParts.com, we supply parts online to cost-conscious consumers, the sort of people who are keeping their cars in good working order because a new car — or even substantial repairs — would be a major financial burden.

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These are the people who are going to get hit worst in a trade war.

If the full weight of the tariffs goes into effect, the price of, for instance, a pick up truck dash cover will increase $25 in price, a Nissan catalytic converter will increase by $40, and a Honda CR-V driveshaft will increase $50. At a time when studies say 40 percent of Americans have trouble handling a $400 emergency, such price increases would be problematic for lower-income and even middle-class citizens.

This is not some far-off concern. The average passenger vehicle on the road in America is 12 years old, and, as with any piece of mechanical equipment, parts wear down. People trying to keep their cars on the road will inevitably have to pay these higher prices. Yet, as 86 percent of Americans drive to work (including 76 percent who drive to work solo), they won’t really have a choice.

It’s worth talking about the car parts industry, because these expenses, for the most part, are non-discretionary. You can put off buying a new outfit, or a new piece of furniture. But if your family car stops running, you have to fix it. Yet across the economy, tariffs are set to hit lower-income Americans the hardest. According to the Peterson Institute for International Economics, the poorest households take on a disproportionate helping of the pain. Whereas households earning over $150,000 a year — the people most likely to notice a drop in the stock market or a price increase on a motorized scooter — will be able to take the tariffs in stride, households earning below $50,000 annually will not.

Take agriculture tariffs. While we hear about their effects on farmers, they’re also going to hit the middle class hard. Middle-class people, after all, pay a larger percentage of their total income on food than do the wealthy.

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Or, take another item — similar food and transportation — that tariffs hit directly, and that middle and low-income Americans cannot do without: clothing. Clothing faces higher tariffs as part of this trade war, and consumers feel the brunt of the price increase.

Taken together, JP Morgan estimates the average American will pay an additional $1,000 because of the trade war — and remember, that’s 2.5 times the $400 emergency that 40 percent of Americans already cannot afford.

I understand why we’re engaged in a trade war. I’ve worked for decades with Chinese suppliers, and, while the majority are unfailingly honest, some manufacturers and Chinese government entities engage in unfair practices. We should have a debate about the best way to encourage better behavior from our Chinese counterparts.

What we should not do, however, is have a dishonest debate about who tariffs are hurting.

Tariffs are not abstract, and they are not distant. Their victim is likely a mom who must keep her 12-year-old Chevy Malibu on the road so she can drop off the kids at school and go to work. She cannot afford a $1,000 surprise. And we should not ignore her while we focus on the price of a motorized scooter or a wealthy person’s stock portfolio.

Charles Fischer is Chief Merchandising Officer at CarParts.com.