Trump probably needs better advisors…
US President Donald Trump’s new tariffs on Chinese products went into effect on Monday. Many Americans are left wondering if they’ll end up paying more for the things they buy. Experts predict that the answer is yes.
That’s because, while free trade generally increases purchasing power, tariffs can reduce it. And although Commerce Secretary Wilbur Ross claims price increases will go unnoticed, others expect the impact on consumers to be more significant.
“Things are going to become more expensive because of this added tax,” best-selling author and personal finance expert Chris Hogan tells CNBC Make It. “This has the potential to impact a lot of areas that people need day to day to survive or to run their business.”
The latest round of U.S. tariffs is a 10 percent levy on $200 billion worth of Chinese goods, which is set to rise to 25 percent by the end of the year. That’s on top of the $50 billion worth of tariffs on Chinese goods that went into effect in August.
How much more Americans would pay, and for what
The Office of the United States Trade Representative issued a comprehensive list of Chinese products that the U.S. plans to target. The list includes everything from vegetables and seafood to chemical elements and construction materials.
Including these latest additions, tariffs will cost the average American family $127 per year, according to an analysis from Kirill Borusyak, a postdoctoral associate at Princeton University, and Xavier Jaravel, an economics professor at the London School of Economics. The effect on you will vary based on what you buy, and the extra amount you’ll pay could increase significantly if you make more substantial purchases.
Here are some notable goods that may become more expensive for American consumers as a result of the tariffs:
- Homes and home renovations
- Washing machines
- Solar panels
Many American companies have already announced that tariffs could force them to raise prices, including Walmart, Gap, Coca-Cola and General Motors. Macy’s also expects to be affected, and some Apple products are expected to get more expensive as well, although not its new smartwatch or wireless headphones.
With tariffs on certain construction materials, houses themselves may jump in price. The U.S. tariffs on Canadian lumber may have already contributed to increased housing costs in the U.S., reports the New York Times. They’re “adding about $9,000 to the cost of the average single family home,” writes Sandy Weaver, senior adviser at Petrovic Weaver Financial Services, in the Kansas City Star.
“There’s no way around it: Tariffs are taxes on American consumers,” says David French, senior vice president for government relations at the National Retail Federation. He adds that some prices might increase as soon as the holiday shopping season.