President Donald Trump announced new tariffs that might significantly impact consumer expenses. These recent tariffs, combined with existing levies and retaliatory measures worldwide, are likely to raise the costs of everyday goods. The ongoing trade wars have already unsettled financial markets and introduced uncertainty for businesses. Economists caution that this could lead to weakened economic growth and increased inequality.
Tariffs, which are taxes on imported goods, increase costs for companies purchasing foreign products. These higher costs are typically transferred to customers. Trump maintains that tariffs will shield U.S. industries from unfair foreign competition and generate federal revenue. However, as many products are part of a global supply chain, these tariffs may result in higher prices, from groceries to car repairs.
Josh Stillwagon, an economics associate professor at Babson College, explained that the immediate price increases are passed on to consumers quickly after retailers acquire new stock.
These tariffs are expected to have unequal effects on consumers. Low-income families, in particular, will notice higher prices on essential items like food and energy, straining their budgets further. Gustavo Flores-Macías, a government and public policy professor at Cornell University, noted that even minor price hikes can disproportionately affect low-income households who spend more on basic goods. For big-ticket items, such as cars, higher tariffs mean significant price increases, which are easier for high-income individuals to manage. Dipanjan Chatterjee, vice president at Forrester, described the tariffs as a regressive tax, impacting people with lower incomes more severely.
Experts also warn of potential job impacts. Although Trump argues that tariffs will boost U.S. manufacturing, changes in profit margins or supply sources might lead to layoffs globally. Flores-Macías pointed out that lower-income families could be the first to lose jobs as tariffs spread through the economy. Susan Helper, an economist and former White House adviser, stated that the current situation does not provide enough stability for businesses to invest in new jobs or facilities.
The tariffs are set to tax imports from almost all American trading partners, potentially raising prices on fruits, vegetables, electronics, clothing, and auto parts. Prices on perishable items may increase first due to frequent stock replenishment. Other goods, such as electronics and household products, could also see price hikes in the coming weeks and months. John Breyault of the National Consumers League cited a Yale Budget Lab analysis estimating an annual loss of $980 for low-income households due to these tariffs. The clothing and textiles sector could see apparel prices surge by 17%. Building materials could also become more expensive, with an estimated $9,200 increase in new home costs, according to the National Association of Home Builders.
Reconfiguring supply chains for domestic production is complex and time-consuming. Certain products, like bananas and coffee, can’t be sourced domestically on the same scale, leading to potential inflation even for U.S.-made goods. Stillwagon warned that the price hikes might not be a one-time event. Helper expects people to absorb increased costs for some products, such as coffee, while seeking alternatives for others.
Consumers can prepare by stocking up on necessities, staying mindful of not over-purchasing, and considering secondhand or generic options. Stillwagon emphasized the importance of not panic buying as seen during the early COVID-19 pandemic. Chatterjee advised consumers to evaluate their budgets and consumption habits, as the effects of tariffs might last until policy changes are introduced by a future administration.
Additionally, consumers should be vigilant for “shrinkflation,” a strategy where firms reduce package sizes to conceal price increases. Breyault recommends checking unit prices where available to make better comparisons between products.
