WASHINGTON (AP) - President Donald Trump's new tariff regime marks a significant departure from the longstanding global trend of reducing trade barriers, potentially resulting in increased prices for American consumers and a slowdown in the U.S. economy, according to economists. The White House is betting that other nations will incur enough economic distress from the tariffs, which were imposed on Wednesday, to encourage them to open their markets to more American exports. This, it is hoped, could lead to negotiations that would lower the tariffs.
Another objective is for both American and international companies to reconsider their global supply chains and shift more production to the U.S. in order to evade higher import taxes. However, a crucial issue for the Trump administration lies in how American consumers respond to the tariffs. If there is a noticeable rise in prices accompanied by job losses, public opinion could sway against these duties, potentially complicating efforts to maintain them long enough to incentivize businesses to return to the U.S.
The Yale Budget Lab has projected that the overall economic impact of Trump's tariffs may cost the average household approximately $3,800 in heightened prices within the year. This estimation encompasses not only the effect of a newly introduced 10% universal tariff but also significantly higher tariffs affecting around 60 countries, along with previous import taxes on steel, aluminum, and automobiles. Further, inflation is expected to exceed 4% this year, a notable increase from the current rate of 2.8%, while the U.S. economic growth could be minimal, according to forecasts from Nationwide Financial.
Economists predict that the average U.S. tariff could escalate to nearly 25% by the time the tariffs are fully implemented on April 9, which would mark the highest level seen in over a century and exceed the infamous 1930 Smoot-Hawley tariffs, widely criticized for exacerbating the Great Depression.
Mary Lovely, a senior fellow at the Peterson Institute for International Relations, expressed concern, stating that the president's actions effectively delineate the U.S. economy from the global market. She warned that the current policies are setting the stage for higher prices and slower economic growth over the long term. However, Commerce Secretary Howard Lutnick, in an interview with CNBC, maintained a more optimistic perspective, asserting that these policies would eventually facilitate greater access to international markets for American exports.
In the wake of the tariff announcement, American public reactions have been mixed. Bob Lehmann, a 73-year-old resident in Portland, Oregon, expressed his disapproval, arguing that the tariffs would lead to increased living costs. In contrast, Mathew Hall, a 64-year-old paint contractor, supported the tariffs and believed that the short-term price increases would be outweighed by long-term benefits for the American economy.
This divergence in public sentiment was also reflected in a debate between family members outside a Tractor Supply store in Castle Rock, Colorado. Chris Theisen, a 62-year-old Republican, voiced his enthusiasm for the tariffs, believing they could create jobs in the U.S. Conversely, his great-nephew, Nayen Shakya, a Democrat, highlighted the immediate financial strain higher prices are placing on consumers, recounting how menu prices at his workplace have risen due to increased ingredient costs.
As these discussions unfold, Theisen acknowledged the validity of his nephew's concerns, admitting the uncertainty of the outcomes tied to the tariffs. The conflicting perspectives within the community reflect the complexity and potential ramifications of the new trade policies announced by the Trump administration.
