Would Trump's trade taxes hurt consumers?
Donald Trump's proposal of impose new tariffs on imports has generated an intense economic debate.
Although the measure aims to protect the national industry, many experts warn that could have negative effects on American consumers by increasing the costs of essential consumer goods.
In this article, we will discuss how the duty could impact households, businesses, and the overall economy of the United States.
What are tariffs and how do they work?
The duty They are taxes applied to imported goods, with the aim of making foreign products more expensive and promoting national production.
For example, if a 25% tariff is applied to an imported car worth $40,000, the final cost would increase by $10,000.
This increase can have two main consequences:
- Importing companies assume the initial cost, but pass it on to the final consumer through higher prices.
- Rising costs reduce the competitiveness of foreign products, encouraging consumers to opt for domestic products.
Donald Trump's trade strategy
During his previous term, Trump implemented protectionist trade policies, such as the ""trade war" with China, where tariffs affected goods such as steel, aluminum, household appliances and agricultural products.
Now, he proposes:
- 25% tariffs to imports from Mexico y Canada.
- 10% tariffs to goods from China and other international markets.
The stated intention is to revitalize American industries, protect jobs and reduce the trade deficit.
But what real impact would these measures have on American consumers?
Direct impact on consumers
Increase in prices of essential goods
One of the most immediate effects of tariffs is the increase in prices for products that are imported or that depend on foreign components.
These products include:
- Appliances and electronic devices: Many technology products are assembled outside the US with imported parts.
- Automobiles:Automotive companies depend on the global supply chain.
- Food and agricultural goods: Tariffs on countries like Mexico could affect fruits, vegetables and other basic products.
American consumers, especially those with low and middle incomes, would be the most affected, as these products represent a significant proportion of their monthly spending.
Reduction in purchasing power
An increase in prices inevitably reduces the purchasing power of households.
The Peterson Institute for International Economics estimates that the average household in the middle of the U.S. income distribution would lose about $1.700 annually.
This would negatively impact:
- Domestic consumption, a key driver of the US economy.
- La inflation, which could be accelerated due to rising prices for imported goods.
Effect on the US economy
Impact on employment and national production
Although the main purpose of tariffs is to protect local industry, the effect is not always positive.
The industrial sectors benefited, like steel and aluminum, they might see a temporary improvement.
However, other sectors more dependent on imported goods would suffer:
- Job loss in companies that depend on foreign components.
- Increase in production costs, which reduces the global competitiveness of American companies.
Consequences for small businesses
Small and medium-sized enterprises, which lack the capacity to absorb additional costs, would be the most vulnerable.
The Tariffs increase the prices of imported raw materials and components, making it difficult to compete in a global market.
For example, if a small business relies on Chinese electronic parts to manufacture its products, tariffs will increase costs, limiting its ability to offer competitive prices.
The international response: retaliation and trade war
Another crucial factor to consider is the response of U.S. trading partners.
In the past, Countries such as China, Canada and the European Union criticized Trump's tariffs.
These measures adopted by Trump, could face retaliation that may include:
- Imposition of tariffs to American exports, such as soybeans and other agricultural goods.
- Demand reduction of American products in key markets.
This particularly affects farmers and manufacturers who depend on exports, creating a negative economic impact in rural areas and manufacturing states.
What do economic experts say?
Many economists warn that tariffs are a costly and, in many cases, ineffective measure to protect the national economy.
In a survey conducted in September 2024 by the University of ChicagoA group of prominent economists was asked if they agreed with the statement that “the imposition of tariffs causes a substantial part of the burden to fall on consumers in the country that applies them, through price increases.”
Only 2% expressed disagreement.
But there are also economists who support Trump's tariff plans as a way to boost American industry, such as Jeff Ferry of the Coalition for a Prosperous America.
Are tariffs a viable solution?
While tariffs may offer short-term benefits for certain industries, its negative impact on consumers and the economy in general is significant.
Tariffs not only increase prices, but also:
- Discouraging innovation by reducing global competition.
- They affect investor confidence, generating economic uncertainty.
How could Trump's tariffs affect EU consumers?
Although Donald Trump's proposals are focused on tariffs aimed primarily at China, Mexico and Canada, his protectionist policies could have a indirect effect on consumers of the European Union (EU) due to the global interconnection of economies.
Impact on European exports
If the US adopts a more aggressive tariff policy, there is a possibility that the EU will also be targeted by similar measures, as happened in 2018 with the tariffs imposed on steel y European aluminium.
In that scenario:
- European products would be less competitive in the US market due to higher prices caused by tariffs.
- EU exporting companies, especially in sectors such as automotive, technology and luxury goods, would see reduced their sales In U.S.A.
This not only affects businesses, but also impacts European consumers who could face:
- Reduction in income and loss of jobs in export sectors.
- General economic slowdown if trade between the EU and the US declines significantly.
Increase in prices of imported goods
Many consumer products in Europe rely on global supply chains, which include materials and components sourced in the United States.
If a commercial war global intensifies:
- Production costs would rise, as European companies would pay more for materials subject to tariffs.
- The European consumers They would end up paying more for final products such as cars, electronic devices and imported foods.
For example, a high tariff on American parts could impact European automakers such as BMW o Volkswagen, increasing their costs and passing them on to the final price of the vehicles.
Risk of trade retaliation
The European Union, in response to US tariffs on black olives, could apply retaliatory measures against US products
An example of this is a list of American products that will be subject to tariffs.
- Consumer goods: motorcycles (Harley-Davidson), whiskey (Bourbon) and other iconic products.
These actions not only make imported goods from the US more expensive, but can reduce the supply of certain products, harming the variety and access for European consumers.
Conclusion: A clear impact on consumers
Donald Trump's proposed tariffs, while intended to protect the national economy, could backfire on American consumers.
Rising prices for consumer goods, reduced purchasing power and the risk of trade retaliation are challenges that cannot be ignored.
While protectionism may seem like an attractive short-term solution, its implementation must be carefully evaluated to avoid collateral damage to the American economy and households.
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