China-U.S. Trade Tensions: Tariff-related price hikes would hit low-income families hardest

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01:44

Two of America's largest chain stores recently announced they would have to raise prices if new tariffs on Chinese goods are implemented. Economists say that would hit lower-income Americans the hardest. Karina Huber has more.

Walmart, the world's largest retailer, recently warned prices at its U.S. stores will likely rise. In May, its Chief Financial Officer said: Our goal is to be the low-price leader but increased tariffs will increase prices for consumers. Macy's is also warning of possible price hikes ahead.

The alerts came after the Trump administration increased tariffs on 200 billion dollars-worth of Chinese imports from 10 to 25 percent. And as it threatened tariffs on an additional 300 billion dollars-worth of goods, essentially all Chinese imports not already hit.

Research by a group of leading economists published during the Obama administration suggests lower-income Americans are the hardest hit by tariffs. Their report says the burden of tariffs is five times as heavy for the bottom tenth of households as for the top tenth.

That's because lower-income groups tend to use more of their take-home pay to cover basic needs and they tend to buy more low-cost imports.

"Why should prices rise just because of a trade I mean it has nothing to do with any of us. It has everything to do with politics and the government."

"Raise prices on the clothes that makes people not want to go and shop at Macy's just because of that."

KARINA HUBER NEW YORK "Retailers like Macy's are in a tough position. They may need to raise prices to cover increased costs but they don't want to raise prices too much or they could lose business. Karina Huber, CGTN, New York."