Former Toys “R” Us CEO Gerald Storch on Thursday said the hysteria over President Trump's tariffs on Chinese goods is "way overblown" and that markets should be trading on the fundamentals of the U.S. economy— not on the tariffs.
“When you take a look at the $300 billion dollars of goods that will be subject to these tariffs —you know, much of which is not until late into December of this year, those goods imported from China represent approximately 3 percent of total consumer expenditures," he told FOX Business’ "Varney & Co."
"So you're talking about 15 percent tariff on 3 percent, a fraction of a fraction. It's just not material to the consumer.”
The fundamentals of the U.S. economy are strong.
While growth has slowed, the U.S. economy grew at an annualized rate of 2 percent during the second quarter, according to a Commerce Department report published Thursday.
In addition, consumer sentiment is very strong. The Conference Board said on Tuesday that while consumer confidence declined marginally in August, the Present Situation Index, which measures consumers’ assessment of current business and labor market conditions, was at a 19 year-year high.
This was not the case during the Great Depression-era Smoot-Hawley tariffs, which were signed into law by President Herbert Hoover.
“There were 50 to 60 percent levels that we all learned in, you know, economics class destroyed the economy," Storch said.
"And it's why we all heard tariffs are bad. This is a small percentage tariff on a small percentage of total consumer expenditures.”
Varney asked Storch if Americans would be willing to pay more in order to confront China, and Storch said that depends on how much prices rise.
“I do think some product prices will rise,” he said. “My point is it's just not a lot of their total expenditure.”