The biggest reason President Donald Trump won the White House again was dissatisfaction with the economy under Joe Biden. Specifically, the public’s frustration over a spike in inflation, which, even after it cooled, appeared to leave widespread, lingering resentment over the cost of everyday items at the grocery store and elsewhere. Trump has now enacted an extraordinary tariffs regime that will, by design, cause a spike in many of those items.
Trump’s 25% tariffs on nearly all goods imported from Canada and Mexico and 20% tariffs on goods from China mean that around 40% of the items imported into the United States will be subject to a border tax. Those tariffs will, economists explain, almost inevitably be passed on to consumers as higher prices, just as they were after Trump’s far more targeted tariffs in 2018.
Will Trump's base buy his inevitable lies that he’s not to blame for the pinch on their wallet?
Companies that make canned goods are warning about higher prices since most steel for making cans is imported. Craft beer companies generally don’t have the ability to lower costs to mitigate the higher price of cans, so they will almost certainly raise prices to deal with higher costs. A lot of popular fruit, such as avocados, tomatoes and strawberries, is imported from Mexico and will be hit with tariffs. The most popular beer in America, Modelo, is a Mexican import.
Beyond grocery store items, tariffs could exacerbate the affordable housing crisis by making the lumber imported from Canada more expensive.
Many companies perceived as purely domestic manufacturers who would seemingly benefit from a penalty on foreign competition will nonetheless take a blow because of supply chain norms. Consider, for example, that U.S. auto manufacturers rely on car parts from Canada and Mexico and are going to see a huge spike in costs. “Let’s be real honest: Long-term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen,” Ford CEO Jim Farley told investors in February.
Jared Bernstein, the former chair of Biden’s Council of Economic Advisers, estimated in a January column for MSNBC that “25% tariffs on all imports out of Canada and Mexico and 10% on China would cost the average household $1,500-$2,000.” (Since then, Trump has doubled the tariff rate on Chinese imports.)
Global markets plunged after the tariffs went into effect Tuesday, and Canada, Mexico and China have announced their own plans to impose retaliatory tariffs on U.S. exports, setting in motion a trade war within an extremely interdependent sphere of the global economy. Economic analysts are warning that the drag caused by a tax on over a trillion dollars’ worth of imports is likely to help push the U.S. economy into a recession. As businesses try to navigate an uncertain economic environment with rising costs, hiring is likely to slow down, which in turn is likely to reduce consumer spending and deal a significant blow to economic growth.
Trump’s use of tariffs is not only far more sweeping than anything he did during his first term; it’s the most sweeping use of tariffs by the U.S. government in about a century. The coming economic pain raises political questions: What will happen to Trump’s reputation as an effective steward of the economy as tariffs cause prices to soar and possibly induce a recession? Will business elites who have warmed to him finally experience buyer’s remorse? Will Trump's base buy his inevitable lies that he’s not to blame for the pinch on their wallet? Will some of the hard-core MAGA base finally hit a wall and turn on its dear leader?
Trump’s tariffs fulfill the ultranationalist promise he made countless times on the campaign trail. He occasionally warned us of the hardship to come alongside his tirades against migrants and nonsense about bringing down prices. But the pain is due to arrive now, and his having predicted it doesn’t mean it’s necessary or any easier to afford.
