Trump tariffs would raise costs for consumers, economist says

U.S. consumers would likely see prices rise if President-elect Donald Trump goes ahead with a plan to impose tariffs, experts said during CNBC’s news conference on Tuesday. Financial advisors summit.

“Either way, there are costs to consumers,” said Erica York, senior economist at the Tax Foundation.

A tariff is a tax on imported goods. Tariffs are paid by American companies that import these goods.

Companies could pass on higher prices to in-store consumers to offset the cost of tariffs, experts say.

Tariffs can also reduce corporate profits, reducing returns for shareholders and perhaps encouraging companies to keep wages or worker employment low, York said.

“It’s such a company-specific decision,” she said.

In an NBC News interview that aired on December 8, Trump said he would keep his campaign promise to impose tariffs, but said he could not guarantee that American households would not pay more because of tariffs.

“I can’t guarantee anything,” Trump said said. “I can’t guarantee tomorrow.”

For example, Trump imposed tariffs on washing machines, solar panels, steel, aluminum and a range of Chinese goods during his first term. The Biden administration held many of which are intact.

Trump has called for a more drastic tariff regime during his second term.

During his campaign, he floated the idea of ​​universal tariffs, up to 20%, on all trading partners, and of at least 60% on Chinese goods.

Such a policy would increase costs for the average American household by $3,000 by 2025, an October 2025 study found. analysis by the Tax Policy Center.

Low- and middle-income households “who may already be living paycheck to paycheck” would likely see the greatest financial impact from tariffs, said Marianela Collado, CEO and senior wealth advisor at Tobias Financial Advisors.

Last month, Trump also promised 25% tariffs on Canada and Mexico – the US. largest trading partners – if they did not tackle drug trafficking and migration across the border.

However, there is significant uncertainty about how tariffs might be implemented, including which countries and products are targeted.

It is also unclear whether Trump has the authority to unilaterally impose universal tariffs, York said.

Some market experts are not convinced that Trump plans to keep his promises.

His different tariff policies are likely a “kickoff” intended as leverage to “coerce” trading partners during negotiations, David Zervos, chief market strategist at Jefferies, said at the CNBC summit.

‘People try to take something literally [Trump’s] when we know that’s not the way he operates, Zervos said.

Others, however, were less certain of that outcome.

“I hope it’s really just negotiating tactics,” said Barbara Doran, CEO and Chief Investment Officer of BD8 Capital Partners. “But that may not be the case.”

Tariff revenues can be used to offset the costs of a tax cut package. Republicans are watching Capitol Hill.

Trump also nominated Jamieson Greer as his U.S. Trade Representative; Greer was chief of staff to Trump’s former U.S. Trade Representative Robert Lighthizer architect of Trump’s first-term tariffs.

“I think it’s still a big wild card,” Doran said of rates.