The economic landscape is changing yet again. The consequences of the most recent tariffs enacted by the Trump administration are just beginning to show. Our CNBC team of reporters, lighting up the East Coast from the front lines. They do so from five bureaus — Washington, London, Singapore, San Francisco and Englewood Cliffs, New Jersey. These tariffs’ potential economic repercussions are deeply concerning. These impacts will result in layoffs, increased costs, and retaliation from our trading partners.
As if that wasn’t enough, early this past February, Trump terminated the de minimis threshold on imported goods. He soon rescinded this order amid fears it would inundate U.S. Customs and Border Protection with paperwork. Vice President JD Vance contends that Trump’s trade agenda, together with deregulatory efforts and tax-cut initiatives, will ultimately lower prices for Americans. Many economists and U.S. trade partners are questioning how the White House calculated the tariff rates it asserts other countries impose on the U.S.
The Office of the U.S. Trade Representative has outlined its strategy on its website. They brought the idea of a formula that closely mirrors online discussions, albeit with some important differences. This sudden change in tariff policy has particularly impacted countries with large, concentrated levies. For instance, China is hit with a $1,100 or 34% tariff, the European Union a $676 or 20% tariff. Vietnam and Taiwan are close second and third, hit with 46% and 32% tariffs, respectively.
“THE PATIENT LIVED, AND IS HEALING. THE PROGNOSIS IS THAT THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE. MAKE AMERICA GREAT AGAIN!!!” – Donald Trump
And the National Retail Federation, a powerful trade group, argues that the new tariffs will increase prices on shoes, among other common items. In addition, they forecast reduced product quality. On the ground, retailers are bracing for even more painful cuts in the weeks ahead. They are taking a double hit on costs from sweeping new tariffs on imports from key manufacturing centers such as China and Vietnam. These countries are some of the largest suppliers of shoes, clothing, toys, furniture and many other products.
Just last week, Trump posted on Truth Social that tariffs will be imposed on all cars coming into the U.S. He walked through how even cars assembled here depend on thousands of parts brought in from all corners of the globe. This claim has raised experts’ eyes industry-wide who argue that such tariffs would be a massive step in the wrong direction.
“I wouldn’t want to be the last country that tries to negotiate a trade deal with @realDonaldTrump,” – Eric Trump
The economic uncertainty worsened by these tariffs is already taking a toll on multiple sectors. A prime example is that new hotel construction is being delayed as increased building material costs put entire projects—including new hotels—at risk. Baird hotel analyst, Michael Bellisario, noted that the tariff increases could raise their construction costs by up to 10%. This jump is mainly due to materials largely coming from China and Vietnam.
Antonio Filosa, a company spokesperson for a major automotive manufacturer, indicated that they are assessing both the immediate and long-term effects of these tariffs on operations while temporarily pausing production at some Canadian and Mexican assembly plants.
“We are continuing to assess the medium- and long-term effects of these tariffs on our operations,” – Antonio Filosa
So far, the White House has issued tariff rates for 180 different countries. These rates are typically around 50% of what Trump’s own administration falsely alleged those countries were “charging” the U.S. This large difference prompts serious concerns about how these tariffs have been calculated and why.
Now, economists from a variety of institutions are raising alarms over the net economic effects of these tariffs on the U.S. economy. Indeed, some argue that higher prices should be expected as a direct and obvious result of these protectionist trade measures. Seth Sigman, an industry analyst, highlighted that “unfortunately, some of it will result in higher prices.”
“Unfortunately, some of it will result in higher prices,” – Seth Sigman
Chinese manufacturers such as Temu and Shein have exploited this trade loophole to their advantage. They are dumping the U.S. market with cheap products. For American retailers, this influx has created a perfect storm of new competition combined with crippling increased operational costs.
With short-term relief potentially on the table, industry leaders are optimistic for negotiations to relieve these burdens. Steven Mnuchin expressed concerns about cranking up the pressure on businesses. He cautioned that moving the nation’s manufacturing base back to the U.S. would be a complicated endeavor likely to take years.
“I do hope there’s the ability to negotiate them down,” – Steven Mnuchin
The stock market has already taken a dive in response to the uncertainty that has enveloped these tariffs. Mnuchin emphasized that some stocks are down 80 percent. Investors are currently trying to assess the long-term effects of this trade policy change.
“And we’ve seen the stock market, particularly in certain stocks, react pretty negatively,” – Steven Mnuchin
Businesses are responding to the current landscape like never before. They are now facing new financial pressures to maintain their quality while providing competitive pricing as new tariffs inflate material costs. Howard Lutnick, Chief Executive Officer of Cantor Fitzgerald Partners, stressed the need for a level playing field in international trade talks.
“I think what there’s going to be is a world of fairness. Let’s go try to figure out ways for the world to treat us more fairly and more properly,” – Howard Lutnick