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The Key Takeaways
- The tariffs proposed by Donald Trump as a key part of his campaign will probably result in higher costs if implemented.
- Several economists and executives from America's largest retailers have warned of higher prices in recent weeks.
- Trump stated last week that his plan was to impose 25% tariffs on Mexican and Canadian imports and 10% on Chinese products.
Several economists and retailers have warned that the tariffs proposed by Donald Trump, president-elect of America, will likely lead to higher costs for Americans.
Trump made an announcement last week to impose tariffs of up to 25% on any imports that come from Canada or Mexico. He also announced that 10% would be added on top existing tariffs for anything from China. Unknown is whether Trump actually intends to implement the tariffs. Or if he is using this threat as a negotiation tactic. Canada and Mexico, however, have both urged Trump to reconsider. They cited the damage tariffs could do to all the countries concerned.
Experts agree that the impact of tariffs on American consumers will be uncertain. However, they do believe it would increase inflation. Ernest Tedeschi, the director of economics at the Yale Budget Lab, recently told S&P Global that he expects prices would rise 0.75%. This would be the equivalent of four or five months’ normal inflation for consumers at the same moment, he said, and equates to an average household losing $1,200 in purchasing power.
Here's a look at some products that could get more expensive under Trump's proposals.
Consumer Electronics and Appliances
Price increases are expected in this category, as the majority of the electronics and appliances sold in America are imported. Last week, the Consumer Technology Association said the proposed tariffs would be a "major inflation-causing tax on Americans and harmful to the U.S. economy."
Corie Bartley, the CEO of Best Buy (BBY), stated in its latest earnings report that there was “very little in the consumer electronics space that is not imported.” Best Buy is expecting to continue working with President Trump as they have with past presidents. However, she noted that consumers are typically the ones who make the decisions. “ends up bearing some of the cost” According to AlphaSense, when it comes down to tariffs.
Shoes, Clothing and Apparel
Footwear is also a frequently imported product. Footwear Distributors and Retailers of America estimates that 99% of the shoes sold in America are imported. According to U.S. data on trade, more than a third of footwear imported last year came from China.
The FDRA has estimated that families paid $900 million more on children's shoes in 2023 than they would have without existing tariffs.
Ernie Herrman (CEO of TJX Companies, TJX) acknowledged on the earnings call last month that tariffs could lead to higher prices for clothing retailers and others.
Gas and electric powered cars
China is currently the biggest car producer in the world. According to the International Organization of Motor Vehicle Manufacturers, China produced nearly three times as many vehicles last year than the United States.
Even cars produced in the U.S. could get more expensive, as materials like steel, aluminum, and graphite used in electric vehicle batteries would be subject to broad tariffs, according to recent reports from S&P Global and Argus. If Trump and a Republican Congress follow through on their promises to eliminate EV tax incentives, electric vehicles may also become more expensive.
Imported Foods
According to the U.S. Department of Agriculture, more than half of all fresh fruit and vegetables imported into the U.S. by 2022 will come from Mexico.
Produce Distributors Association told Associated Press recently that tariffs on import foods will result in higher prices and smaller margins for U.S. Farmers if other countries retaliate with their own tariffs.
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