Different countries will face varying tariffs, resulting in uneven price increases across different industries. For instance, China, which imports machinery, appliances, furniture, toys, and electronics to the US, will incur a 54% tariff when combining new and previously announced tariffs. On the other hand, the European Union, which imports medical products and vehicles, will deal with a 20% tariff.
The exact aim of Trump's tariff strategy is uncertain, with the president claiming it intends to restore manufacturing jobs in the US. However, some analysts speculate that it might be a deliberate move to induce a recession to lower interest rates. This has caused the stock market to react adversely due to the ambiguity.
Economist Tedeschi explains that the existing tariffs on Mexico and Canada alone are expected to raise prices by about 1%, whereas the new "Liberation Day" tariffs could add a further 1.3% increase to household costs.
As a whole, the tariffs are projected to elevate the overall price level of goods in the US by 2.3%, translating to an average cost of $3,800 per consumer household this year.
Consumers are anticipated to face price hikes across various products due to Trump's aggressive tariff policy, impacting items from groceries to apparel and larger purchases like cars and appliances.
The widespread tariffs, including the newly announced "Liberation Day" tariffs, affect countries like China, Japan, the European Union, and some territories near Antarctica. These tariffs are in addition to existing ones imposed on major trade partners like Canada and Mexico.
President Trump has declared 10% tariffs on goods imported into the US from any country, with even higher rates for 60 trading partners exhibiting a continuous trade deficit with the US.
Economists predict that the cost of clothing items may rise by 8%, while pantry staples like sugar and coffee could see a 1.3% increase. Fresh produce prices are also expected to climb by about 2.2%.
Experts suggest that consumers and businesses will seek alternatives to mitigate the impact of the tariffs, but it will take time to establish new supply chains and find suitable substitutes.
Low-income households will likely be disproportionately affected by the tariffs, as they spend a higher portion of their income on imports and essentials, making them more vulnerable to price increases compared to higher-income households.