President Donald Trump has repeatedly discussed imposing rates, both during the campaign and since he assumed the position, and the first section, on goods from Canada, China and Mexico will enter into force on February 1, confirmed the White House on Friday.
While there are still some unknowns, one thing is clear, economists said: American consumers should prepare for a negative financial impact.
It is “difficult to find positive aspects” of tariffs, said Mary Lovely, the main member of the Peterson Institute of International Economics, whose research specializes in commerce with China and global supply chains.
Trump plans to put 25% tariffs in Mexico and Canada, and a 10% service in China, Karoline Leavitt, the white house secretary, said Friday.
China, Mexico and Canada are the three largest commercial partners with the United States, measured by imported goods. They supplied around $ 536 billion, $ 455 billion and $ 437 billion, respectively, to the United States in 2022, according to the Office of the United States Commercial Representative.
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Tariffs are a tax on foreign imports. American companies that import assets pay that federal government tax.
Many companies will channel those additional costs for customers, either directly or indirectly, so tariffs generally trigger higher prices for consumers, economists said.
“Part of these rates will be transmitted to consumers,” said Lovely.
Americans could also find that they have fewer options for brands and products supplied on store shelves, he said.
Exemptions can limit damage ‘to consumers
There are still many question signs about imminent tariffs about Canada, China and Mexico.
For example, it is not clear if any import will be exempt. Trump suggested Thursday night, for example, that Canadian oil could be exempt. The White House said the rates will be open for public inspection on Saturday.
The discussions about such details are “in progress,” said a White House official to CNBC on Friday morning.
“There are always exemptions and talas,” said Mark Zandi, chief economist of Moody’s.
Trump could try to “limit damage to the US consumer” through those exemptions, Zandi said. For example, I could choose not to impose duties to China’s clothes, Mexico’s avocados or Quebec cheese, he said.
Economic impact
The White House said that Trump’s tariffs and broader economic agenda will benefit the US economy.
White House spokesman Kush Desai said Trump tariff , and that in its second term Trump will wear tariffs. to “mark the beginning of a new era of growth and prosperity for the American industry and workers.”
Economists, however, do not agree.
A 25% Canada-Mexico tariff and 10% of the China rate would raise around $ 1.3 billion in revenues through 2035 on a net base, the committee of an estimated federal federal budget. That income can be used to partially compensate for the cost of tax cuts, a package that could cost more than $ 5 billion in 10 years.
However, an additional 10% tariff on China would reduce the United States economy by $ 55 billion during the second term of the Trump administration, assuming China to retaliate with its own tariffs, according to a Warwick McKibbin and Marcus analysis and Marcus Noland, economists from the Peterson Institute for the International Institute. Economic Sciences
He discovered that a 25% tariff in Mexico and Canada would cause a reduction of $ 200 billion in the gross domestic product of the United States.
Meanwhile, economists expect more tariffs in the future.
In the campaign, Trump made a universal tariff of 10% or 20% above all imports and a tariff of at least 60% in Chinese products, for example.
A 20% world tariff and a 60% tax in Chinese products would increase costs by $ 3,000 in 2025 for the average house of the USA, according to an October analysis of the Tax Policies Center.
“Universal broad base tariffs and the damage they will do is not really a debate,” said Zandi. “They will harm. It is just a matter of how much and who. “
How rates can affect consumers
Consumers could pay both tariffs directly and indirectly, economists said.
China tariffs would probably have the greatest direct impact on consumers, since most of what China exports to the United States are consumer goods such as clothing, toys and electronics, said Zandi.
China is the “dominant supplier” of toys and sports equipment to the US., And provides 40% of its footwear imports and 25% of its electronic and textile products, according to a recent analysis of Piie economists.
The tariffs of Mexico and Canada would also “exert upward pressure on food prices,” according to Piie economists.
The nations are “important sources” of vegetables, which represent 47% of the total American imports and prepared food, 42%. The transport equipment and machinery, electronics and fuel are other sectors that can be more affected, they discovered.
“The United States imports approximately 40% of its crude oil, with Canada as the dominant supplier,” said Nigel Green, CEO of Devere Group, a financial consulting firm, in a written statement.
“If oil is affected by tariffs, the impact could reach energy markets, which increases costs for companies and consumers,” Green wrote.
However, national energy producers, certain US manufacturers and other industries “could see short -term profits from a reduced competition,” he added.
Indirectly, American producers could increase their prices because they face less foreign competition for certain goods, said Lydia Cox, an assistant professor of Economics at the University of Wisconsin-Madison, during a recent web seminar.
American companies that use Tarife goods to manufacture their products could also increase the prices of subsequent products, Cox said. For example, steel tariffs can drive at higher prices for cars, heavy machinery and other products that use steel.
Tariffs ‘create a lot of collateral damage’
Other nations could also respond with retaliation rates that begin a commercial war, which could make US producers lose sales abroad, he said.
“Unlike Canada and Mexico, for which reprisals would be inconceivable, China has taken reprisals in the past and would probably do it again,” Piie economists recently wrote.
In addition, tariffs can have the involuntary consequence of destroying jobs, economists said.
The ability of tariffs to create jobs in the United States is “widely exaggerated,” said Lovely of Piie.
Take steel, for example. There are 80 workers in industries that use steel as an entrance for each work that produces steel, Cox found in a recent article.
Tariffs create “a lot of collateral damage along the way”, so economists warn against the use of broad base, Cox said.
