President Donald Trump has recently escalated his tariff threat. He is now threatening to slap new import taxes of up to 50% on goods from certain countries, a move that would massively increase consumer prices for American consumers. These threats emerge at a time when average tariffs on clothing products, steel, and aluminum are already high. Only since April have these tariffs exploded to jaw-dropping rates.
Right now, the average tariff on women’s clothing is 32%, while men’s clothing is 25%. Other products, such as steel and aluminum, are subjected to even higher tariffs of 50%. If these proposed changes go through, consumers will be paying more in short order for a wide range of imported goods.
Current Tariff Landscape
For the last 3 months, there’s been at least a 10% tariff on every good imported into the US. That creates the perfect climate for price gouging to occur. Tariffs on leather goods, such as purses, are set to increase from 23% to 38%. Should Trump’s deal succeed, tariffs on Chinese goods imported through Vietnam will more than double. Their potential would leap from the paltry 10% all the way up to at least 20%. The impacts of these changes are much more far-reaching than just clothing, with positive effects rippling through appliances and even coffee.
Moving forward, China remains the leading import market force. In fact, it was the number one source of foreign kitchen appliances sent to the U.S. last year. Rounding out the top three is South Korea, now the third-largest supplier. Thailand, Malaysia, and Indonesia are but a few of the other countries where rising tariffs will be felt. Rates could increase all the way to 36%, compared to just 10% today.
The administration has sought to characterize these changes as solely in the public interest of protecting American industries. A White House spokesperson, Kush Desai, stated:
“The Administration has consistently maintained that the cost of tariffs will be borne by foreign exporters who rely on access to the American economy, the world’s biggest and best consumer market.”
The effect is most severely felt in sectors that are import-dependent like textiles or home-related products like appliances. Additionally, expansion of the 5%-8% inflation bar will only raise inflationary concerns as businesses struggle with these new costs.
Economic Consequences
The recently intensifying trade tensions have spurred alarm bells among economic analysts, cautioning of dire consequences for the U.S. economy. Wayne Winegarden, an economist, noted that while some companies have absorbed tariff costs temporarily, this strategy may not be sustainable in the long run.
“Additionally, many companies have been willing to absorb the costs in the hope that the cost increases are temporary. But companies can only absorb the full cost of the tariffs for so long,” he explained.
A White House report released last July argues that despite popular narrative, these tariffs do not increase inflation in the short term. The report states:
“These findings contradict claims that tariffs or tariff-fears would lead to an acceleration of inflation.”
As companies begin to max out on how much loss they can absorb, consumers may begin to pay the price in dollars very soon.
Future Outlook
Looking forward, it is questionable how further tariffs will affect the market. In one sense, such threats don’t mean that much. Trump is using the threats as leverage in his aggressive trade strategy. This strategy has the potential to go far beyond apparel and household products. Potential tariffs on copper would be an enormous blow to the state’s trade landscape. Moreover, any more tariff increases on goods from China would compound this complexity.
Winegarden warned that these tariffs were always meant as temporary solutions and added:
“These actions were always short-term fixes, and the opportunity to front-run the tariffs is ending. Thus, even without any further increases, the costs of the tariffs will be hitting the economy soon.”
As action stalls in negotiations and new tariffs approach on the horizon, Americans may soon feel the effects in terms of higher prices at retailers across the country. The Trump administration’s approach represents a clear pivot in U.S. trade policy. Yet, it leaves on the table critical questions related to its long-term viability and potential negative economic impact.