What Trump's economic policy means for the DIY sector

Will the tariffs already imposed or announced by the new US administration increase the prices of DIY products in the US? The high proportion of Chinese products in the home improvement range springs to mind.

Jim Inglis: Yes, of course, the burden of increasing tariffs must be mostly passed on to the retail customers which will increase the pressure on inflation here in the U.S. — Most DIY retailers will have perhaps 30 per cent of their products in private label products. Most of these products are imported. The increased landed cost of this amount of products cannot be absorbed or ignored. For the U.S. DIY retailer, the threatened 25 per cent on Mexico is far more consequential than the current extra 10 per cent on China, but it is not clear what ultimate tariffs will actually be at this point. It does seem clear that more significant tariffs are inevitable.

How will DIY retailers react?

There is little that a retailer can do to avoid these tariffs in the short run other than beef up inventories quickly before the tariffs are active. However, this is speculative since the policies and actions of the government have been mercurial. We saw this with a one week increase of tariffs on Mexican and Canadian products with reversal the following week to a thirty day delay. Uncertainty prevails which makes decision making difficult. In the long run, there will be a resourcing of products from countries in the favor of the U.S. government which will be negotiating reciprocal trade deals with individual countries. There will also be new production here in the U.S. but the end result will still be higher costs, higher retails, and more inflation.

And how will consumers react?

Customers will have to pay more until they can’t.

Will European counter-tariffs harm US producers?

All tariffs are harmful for the standard of living of all countries and societies. The current administration does not understand this basic economic fact.

Will the US economy also miss the cheap labour force with the mass expulsion of illegal immigrants? How will it replace it? And what does this mean for costs?

Yes - it is estimated that non-documented immigrants represent about 16 per cent of the labour on new construction. We already have a labour shortage regarding manual labour jobs like construction, farming, building maintenance, and the food and hospitality business. This is going to create further delays in obtaining these services and increased cost. Once again this will create more inflation.

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