JCPenney warns Trump’s tariffs will make retail apocalypse worse

“Let’s not burden a mom,
juggling a job and a family, with extra taxes,” wrote JCPenney
counsel David M. Spooner.
Scott Olson
/ Getty Images

• JCPenney predicted that the Trump
  administration’s tariffs on Chinese goods
  will hike up prices and negatively impact its middle class
  customers.
• In a September 6 letter to US trade representative
  Robert E. Lighthizer, the
  retail chain indicated that the tariffs would worsen the
  retail apocalypse.
• The retailer’s counsel David M. Spooner requested that
  the Trump administration remove products like clothing and
  household goods from the list of tariffs.
• “Let’s not burden a mom, juggling a job and a family,
  with extra taxes,” he wrote.

JCPenney is sounding the alarm
on the brewing trade war between the US and
China.

The US has slapped a new tariff on $200 billion worth of Chinese
goods, Business Insider previously reported.

JCPenney’s counsel David M. Spooner came out against the opening
salvo of the trade war in a letter to US trade
representative Robert E. Lighthizer.
According to Spooner, the tariffs will burden middle-class
shoppers and may even amp up the retail apocalypse.

“No retailer will be able to simply absorb the cost of a 10%
percent tariff, much less a 25% tariff in today’s
ultracompetitive retail environment,” Spooner wrote in the
September 6 letter. “That means consumers will pay higher
prices.”

The Trump administration’s tariffs on Chinese products will hold
at 10% until January 1, 2019, at which point they’ll jump to 25%.

Spooner asked the US government to distinguish between
“high-technology products” and consumer goods like luggage,
clothing, and accessories, which are both featured in the
tariffs. He added that JCPenney is unable to “quickly or easily
shift to non-Chinese sources” for products affected by the
tariffs.

JCPenney is just one member of a chorus of retailers that have come out
against the White House’s tariffs, joining Walmart, Target, and Macy’s. But the latest tariffs
aren’t the only worries afflicting the 116-year-old retailer. The
chain just recently endured the sudden departure of its CEO and saw its shares tumble
last month, after its second-quarter earnings fell short of Wall
Street’s expectations.

JCPenney’s letter to Lighthizer held that the brand’s core
customers — value-conscious, middle-class moms — stand to lose
out in the trade war. Spooner wrote that the average JCPenney
shopper “… can’t afford tax increases on knit caps for her
family in the wintertime, on back-to-school raincoats and
backpacks, or on curtains and window shades for the home — or,
for that matter, on purses or handbags.”

The letter cited a National Retail Federation study, which estimated that a
25% tariff on “backpacks, handbags, luggage, wallets, and totes”
alone would “force consumers to pay an additional $1.2 billion as
a result of higher prices, and lead to a 17.7 percent decrease in
purchases of these price-sensitive items.”

“While new proposed tariffs on imports may be aimed at China, it
is JCPenney’s customers who will be forced to pay more at
checkout for items they have always been able to purchase at
JCPenney at a tremendous value,” Spooner wrote. “The imposition
of tariffs on these consumer goods would constitute a regressive
tax increase on hardworking American families. Let’s not burden a
mom, juggling a job and a family, with extra taxes.”

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