(NewsNation) — President-elect Donald Trump plans to impose sweeping tariffs in his second term, but following through on that promise could come at a high cost for everyday Americans.
“If we were to see the full panoply of tariffs that candidate Trump proposed, you would see a substantial increase in the price of almost everything we buy every day,” said Scott Lincicome, vice president of general economics and trade at the libertarian-leaning Cato Institute.
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Trump hasn’t been shy about his love for tariffs — which are a tax on goods imported from other countries — calling them “the greatest thing ever invented” on the campaign trail.
But economists warn those taxes, which are almost always paid by the importer, largely get passed onto consumers.
As a candidate, Trump proposed a 60% tariff on goods from China as well as a 10% to 20% “universal” tariff on all imports, arguing his plan would reduce the trade deficit and protect American jobs.
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The president-elect has also threatened a 25% tariff on Mexico, the United States’ top trading partner, if the country doesn’t do more to stop what he described as an “onslaught of criminals and drugs” coming into the U.S.
If that happens, shoppers can expect to pay more at the grocery store, particularly for items like fresh produce, much of which gets imported from abroad, Lincicome pointed out.
The Tax Foundation — a nonpartisan tax policy nonprofit — recently looked at a dozen estimates analyzing Trump’s proposed tariffs, and every study consistently found his proposals would negatively impact the U.S. economy.
Other commentators are less worried, arguing that Trump’s tariff threats are merely a negotiating tactic to gain leverage.
“He has talked about using those as a negotiating tool to keep China from stealing our technology, to get China to allow our goods and services to go into China … we need to have more pressure on China to have them accept American goods and services, which they’re not doing now,” Grover Norquist, the Republican founder and president of Americans for Tax Reform, told “NewsNation Prime” this month.
During a recent NewsNation town hall, now Vice President-elect JD Vance defended his running mate’s tariff policies, pointing out that inflation was low during Trump’s first term despite aggressive tariffs.
How would tariffs be different in a second Trump term?
Trump’s new tariffs are expected to have far greater consequences than his previous ones because of the sheer magnitude of the proposals.
“Because we’re talking about a wider range of products and a higher level of tariffs and consumer-facing goods, the direct price pain would be more obvious and significant this time around,” Lincicome said.
Items like smartphones and laptops, which weren’t subject to previous tariffs, could be hit especially hard. Under Trump’s proposed tariffs, consumers could see laptop and tablet prices rise 46%, and smartphone prices jump 26%, according to a Consumer Technology Association report.
The 60% tariff on Chinese goods alone would represent a near tripling of the current tariffs on imports from China, economist Pierre Lemieux noted in a report.
“Trump claims the tariffs would boost the economy and working-class families. In fact, they would hit hard the American economy and lower-income families,” Lemieux wrote.
Retaliation is also a concern.
China and Mexico would likely respond with tariffs of their own, which could hurt American exports.
“What we saw during the first Trump term was a lot of actual tariffs imposed, and almost no governments backing down in response to those tariffs,” Lincicome said.
Mexico’s government has already signaled it could hit back with its own trade restrictions — a move that would have serious consequences for American farmers, chemical manufacturers and other sectors.
Altogether, U.S. exports to Mexico were $362 billion in 2022 and accounted for almost 16% of all American exports that year, according to the most recent figures from the Office of the United States Trade Representative.
How much could Trump’s tariffs push prices up?
An analysis by the nonpartisan Peterson Institute for International Economics estimates Trump’s proposed tariffs would cost a typical U.S. household more than $2,600 a year.
“High tariffs also imply a massive shifting of the tax burden from richer taxpayers toward lower-income Americans,” the report said.
A separate estimate from the Budget Lab at Yale estimates Trump’s tariffs could raise consumer prices by 1.4% to 5.1%. That’s the equivalent of $1,900 to $7,600 per household.
The uptick in prices would likely show up at the grocery store. That’s because much of the food consumed in the United States — about 60% of fresh fruit and 38% of vegetables — is imported, according to Department of Agriculture data.
Consumer products like apparel, toys, furniture and footwear, are also expected to get more expensive with new tariffs, the National Retail Federation (NRF) said earlier this month. The NRF warned the proposed tariffs would have a “significant” and “detrimental” impact on a wide range of items and reduce Americans’ spending power by $46 billion to $78 billion each year they’re in place.
A $90 pair of athletic shoes is expected to jump to $106-$116, the NRF estimated. Meanwhile, an $80 pair of men’s jeans would cost $90 to $96.
It’s also worth mentioning: Trump’s first-term tariffs didn’t send prices skyrocketing across the board, but they did come at a cost. After accounting for direct costs and efficiency losses, economists estimate the tariffs increased costs for average American households by about $830 per year.
For example, Trump imposed a tariff on imports of washing machines in 2018. Researchers estimate the price of washing machines increased by around 12%, about $86 per unit.
Do tariffs protect jobs?
One of Trump’s main arguments in favor of tariffs is that they prevent American businesses from offshoring jobs, but it’s not that simple.
Workers who produce the specific goods covered by tariffs often benefit, but tariffs can also hurt workers in other industries that rely on those imports.
“You can protect the steel industry with tariffs, but higher steel prices are going to harm manufacturers that need steel in the United States and are going to harm all those workers,” Lincicome said.
In other words, a government tariff may be trading jobs in one industry at the expense of jobs in another.
Going back to the washing machine example, researchers determined the policy created about 1,800 new jobs, but at a steep cost of as much as $817,000 per job.
The Tax Foundation estimates Trump’s proposed tariffs would bring down total employment by 684,000 jobs — an estimate that doesn’t include the effects of retaliation.
A 2024 paper by a group of top economists looked at Trump’s 2018 tariffs and found that “import tariffs on foreign goods neither raised nor lowered US employment in newly-protected sectors.” However, retaliatory tariffs had “clear negative impacts,” primarily in agriculture.
