Brazil’s preparing for the worst economic recession since the 1930s. Even without this added pressure, the country is about to face a drastic 50% tariff from the United States. In that regard, President Donald Trump has put this punitive measure to use as part of a larger strategy. Business leaders are rightly concerned that these tariffs will unequivocally increase consumer prices in almost every sector. Now we have Trump signaling that he may impose similar tariffs on all other U.S. trading partners. Adding the European Union, Mexico, and Canada to the mix makes it even more complicated.
The impacts of these tariffs are being felt throughout the economy. Whatever the cause, recent news showed that inflation jumped up to 2.7% in June, most of that being blamed on Trump’s trade war. The annual inflation rate increased from 2.4% in May. Core Consumer Price Index (CPI) numbers—which remove volatile energy and food prices—rose modestly to 2.9%. A year ago, inflation was nearer 3%, and it peaked at 9% three years before that.
In an effort to negotiate these tariffs, Trump initially set a deadline of July 9 for discussions with Brazil and other trading partners. He subsequently moved that deadline up to August 1. This pace reflects his desire to lock in deals before additional economic damage occurs. This month, the president threatened the EU and Mexico with a 30% punitive tariff. He’s even subjected Canada to a 35% tariff as well, which underscores his trade war mentality.
Other business leaders lament the unpredictability of Trump’s tariffs. They understand that these tariffs are making it impossible for companies to avoid raising prices for Americans. Make no mistake—prices have already started to rise since May as the tariffs go into effect. Experts do not make any promises about that trend lasting unless ongoing negotiations bring favorable outcomes to the U.S.
Trump’s highest tariffs were previously paused in the spring, offering a temporary reprieve for businesses. The renewed threats have reignited fears of escalating costs. The potential for widespread price increases due to the administration’s trade policies raises questions about the overall health of the economy and its impact on everyday consumers.