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The average American household will be down $1,000 per year thanks to the newest round of tariffs on Chinese goods, according to J.P. Morgan.

The firm estimates the average annual tariff cost per household will increase from $600 from the first two rounds of tariffs to $1,000 in the latest round.

“What distinguishes China Phase III tariffs from preceding tariffs is the impact to Consumption and Capital goods whereas previous tariffs focused more on Intermediate goods,” said J.P. Morgan head of U.S. equity strategy Dubravko Lakos-Bujas said in a note to clients. “This suggests that the expected consumer impact should be larger in the latest round.”

Earlier this month, President Donald Trump surprised investors by ending a tariff ceasefire with China, announcing new tariffs of 10% on the remaining $300 billion in Chinese imports, starting on September 1. The third round of tariffs are the most consumer-facing tariffs to date, while the first round announced last year and the second round announced in May focused more on intermediate goods.

Lakos-Bujas said unlike the agriculture sector, which is receiving subsidies from the government to offset some of the tariffs, “there is no simple way to compensate consumer.”

Retailer stocks have suffered this month as the list of new tariff goods impact apparel, footwear, consumer electronics, and toys. Trump delayed and cancelled some items on the list ahead of the Christmas season to avoid an impact on holiday shopping. he said.

Despite the larger tariff impact, the U.S. consumer appears strong. July retail sales grew more than expected from June and posted the strongest five-month growth streak since 2005-2006. About 70% of economic activity is tied to consumer spending

Given the larger impact on the wallet of the U.S. consumer going in the 2020 election, Lakos-Bujas said the administration will likely rollback tariffs or compromise on a trade agreement.

“We believe there is a good chance they end up reversing their decision and finding a way to reach some common ground with Chinese negotiators,” he said.

The firm estimates that Trump’s new tariffs will cost Americans the majority of the tax break they are getting from Trump’s 2017 tax overhaul, which it estimates is around $1,300 per year.

— with reporting from CNBC’s Michael Bloom

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