President Donald Trump is hinting that broader tariffs are coming soon, particularly on goods from Canada, China and Mexico.
As of Tuesday, Trump has threatened tariffs of between 10% and 100% on Chinese goods and 25% on Canadian and Mexican goods. during A press conference at the White HouseHe suggested that these could be implemented as early as February 1.
In addition to generating federal revenue, Trump says his tariffs will spur manufacturing here at home and retaliate against countries he sees as taking advantage of America.
“Other countries are also big abusers,” Trump said. “It’s not just China. The European Union is very bad for us.”
Meanwhile, experts are warning that tariffs — which in this case are trade taxes that must be paid by American businesses — could drastically increase the cost of everyday products for Americans.
About 25% of the goods that Americans buy come from other countries, and recent studies have found that consumer technology (such as laptops, TVs, smartphones), clothing, furniture, toys, and other items can increase in price. If tariffs are imposed, collective loss results. About $150 billion in purchasing power for Americans.
The timing isn’t great, either: The proposals come just as the country is rocking one of these Most shocks of inflation After World War II.
Jonathan Gould, vice president of supply chain and customs policy with the National Retail Federation, told Money in December that “right now, there’s a lot of uncertainty” about which countries will face tariffs and how high those rates will be. The industry trade group represents retail giants such as Amazon, Target and Walmart.
But analysts agree that whatever the final tariffs may be, the prices of affected products will do Go up and that means you should act now to save money.
How high prices could go if Trump imposes sweeping tariffs
Not yet clear, Trump has promised to impose 10% to 20% tariffs on all imports from all other countries — as well as Canada, China and Mexico, the country’s three biggest importers. has promised to impose strict tariffs on In early December, Trump warned that countries like Brazil and Russia could see tariffs of up to 100% in some cases.
Legally, Gould says, Trump would have full authority to set new tariffs without needing congressional approval. Earlier on Monday, Trump signed an executive order that “America’s first trade policy“To examine the U.S. trade deficit with other countries. The order directs the U.S. Treasury Department to study the possibility of creating a new External Revenue Service agency to collect tariffs and other trade taxes.”
The economic fallout of sudden and sweeping tariffs can be severe: If the recent pandemic-induced inflation crisis has proven anything, it’s that when businesses have to spend more money to get their products to the shelves, Many of them are ready and willing to raise prices. compensation
Actually, executive A Wide range of companies Like AutoZone, Walmart and Lowe’s are already signaling that their prices will increase if the tariffs go into effect.
“At the end of the day, the economic evidence is clear that while tariffs are a tax ultimately paid by Americans, businesses often pass most or all of the tariff cost on to consumers in the form of higher prices,” says Ernie Tedeschi, director of is of the Economics of the Budget Lab Yale University.
Several organizations are modeling how high these prices could go. The The NRF said in a November report that the spending power of everyday consumers will be reduced by between $46 billion and $78 billion for each year that the tariffs are in effect.
Assuming broad tariffs of 10% to 20% on all countries and 60% to 100% on Chinese goods, the price of toys, for example, would rise by 97%. Shoe prices will increase by 69%; The cost of furniture will increase by 54%.
Budget Lab, which analyzed various scenarios and tariff rates, likewise forecast Huge price increases impacting everyday Americans’ budgets: Nearly a quarter of consumer goods spending in 2023 was imported, Tedecchi notes.
Depending on the exact tariff rates and whether Americans are able to source the products they need from a country less affected by the tariffs, he says the average household would lose between $2,200 and $3,900 in spending power.
Meanwhile, Ed Brzytwa, vice president of international trade at the Consumer Technology Association, said in an interview in December that home tech items such as smartphones, laptops, TVs and the like are at particularly high risk of big price changes from tariffs. is (The Consumer Technology Association is a trade organization representing consumer technology brands, including Adobe, Google and Sony.)
“The production of some of these items never existed in the United States,” Brzytwa says.
That means buyers can’t switch to American versions of the same products, and businesses can’t quickly launch high-tech products with their existing infrastructure.
CTA is presenting That Americans’ purchasing power for consumer tech will drop to $90 billion — and that’s on top of the $46-to-$78 billion range cited by the NRF, which didn’t account for tech gadgets in its analysis.
What should you buy before the tariffs come into effect?
While retailers are ready for another blow to them supply chain And with organizations warning of impending price hikes on all kinds of everyday goods, that doesn’t mean you should go shopping.
“The last thing we want to see is people going in and panic-buying,” Gold says. “That leads to its own issues and challenges that we saw during the pandemic.”
But there are some big purchases you might want to consider sooner rather than later. is an example of so-called durable goods. These are big-ticket items that aren’t bought often — think: washer, dryer, refrigerator, car or laptop.
They are expensive things that people usually plan for in advance. Given that prices are likely to rise, Gould says if you’ve been in the market for one of these splurges and are “ready, willing and able” to make that purchase before Trump’s inauguration, you should look now. can start .
“If you are already seriously considering a large purchase a car or a large home appliance or think you might need it next year, it’s not a bad idea to start your comparison shopping now,” says Tedeschi.
Items you should discard include clothes and toys. Although these commodities are expected to be phased out by future tariffs, there is no real reason to buy them in advance, as they are fairly short-term or seasonal commodities. The same is, of course, for gas and commodities, whose prices are projected to rise sharply in the coming years.
While much is still up in the air, experts recommend being aware of where your products are coming from and how they may be affected by tariffs. Wherever possible, try to find options that are not subject to tariffs at all. If this is not possible, try to find them that come from countries where the tariff rate is lower.
In some cases, however, it will not be possible to avoid tariffs altogether. Even items that are widely considered to be made in the U.S. — Tedeschi noted certain car models as a good example — may still have many imported parts, especially their computer systems. .
He also says that some goods that escape tariffs altogether may see price hikes anyway. He refers to these as “complementary objects”. For example, during Trump’s first term, washing machines were hit by new tariffs. There were no dryers, but still their prices went up. Since people usually buy these items together, their prices tend to fluctuate.
“It’s just one more thing that consumers will need to research and be aware of,” he says.
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