Trump on Tariffs: How the plan on imported goods could cost Americans

Now that President-elect Donald Trump is headed back to the White House, Americans are waiting to see how the 47th president will impact their everyday lives, with a special focus on how he handles the economy.
While Trump has promised to lower inflation, he has also pushed tariffs on imported goods as a way to boost American businesses.
The tariffs would be implemented as a tax on imports, but that doesn’t mean they are paid by foreign countries. The cost falls to importing companies, who typically pass them to consumers, who are forced to pay a higher price.
“These tariffs would certainly mean higher prices for us American consumers,” Michael Ryan, a finance expert and founder of michaelryanmoney.com, told Newsweek. “Retailers/importers will pass these increased costs onto shoppers, driving up the price of everyday items like toasters and washing machines.”
Newsweek reached out to Trump for comment via email.
Trump made the tariffs a priority in his campaign as a way to protect American jobs and punish countries like China, which often produce goods with cheap labor and bad working conditions.
Despite this, Goldman Sachs economists and others have been warning that the tariffs could have long-term consequences, from higher prices for everyday Americans to a trade war that could hurt the products America exports to other countries.
“In the short term, this plan could be painful, as increased tariffs on imports usually result in higher prices for American consumers,” Kevin Thompson, a finance expert and founder and CEO of 9i Capital Group, told Newsweek.
“Tariffs act as a cost to importers, which they then pass along to consumers. Farmers, for example, were immediately affected by higher prices due to tariffs, though some relief came later.”
The National Retail Federation predicted that the tariffs could cost the U.S. between $46 billion and $78 billion per year in lost purchasing power. An estimate from the Peterson Institute predicted that middle-income families could face annual losses of at least $2,500.
As part of the tariff plan that he outlined before winning the presidency, Trump pledged to add a tariff of up to 60 percent on Chinese goods and up to 20 percent on imports from other countries.
“While he has suggested various levels of increase, he often emphasizes that the plan is more about creating a sense of fear than the specific percentage,” Thompson said. “This approach is considerably more restrictive than current trade policies.”
Ryan said Trump’s proposals are a dramatic escalation from his previous trade policies, and they could end up leading to a major disruption to existing trade relationships.
“Trump seems intent on a broad-based crackdown on imports,” Ryan said. “This will reignite trade tensions, provoking retaliation from key trading partners like China and Mexico. Experts have been warning it will lead to a full-blown global trade war.”
During his first term, Trump also focused on tariffs against China but nowhere near the level of his promises during his most recent campaign.
His America First policy implemented tariffs on solar panels and washing machines in 2018, at a range of 30 percent to 50 percent.
Trump also added a 25 percent tariff on steel and a 10 percent tariff on aluminum for many countries. It affected imports from China, Europe, Canada and Mexico.
While Trump’s tariffs have been a significant talking point for both major parties, Thompson said it’s uncertain whether they would get approved.
“Approval will depend on whether a bipartisan consensus can be reached in the House of Representatives,” Thompson said. “During his administration, many of Trump’s campaign promises were blocked, even when his party controlled both chambers of Congress. Whether this plan succeeds will depend on the political climate and the priorities of Congress.”
While Trump believes the tariffs would incentivize companies to relocate production to the U.S., economists are skeptical it will actually happen.
“Given Trump’s track record of imposing significant tariffs during his first term, it seems plausible that at least some elements of his new trade crackdown will come to fruition,” Ryan said.
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, said tariffs are advertised as ways to bring more revenue to the federal government and make American goods more competitive, but they often result in a worse-off economy.
“Economists are pessimistic because prior data on tariffs over the last century have shown they aren’t as positive as billed. The amount of revenue they bring in is minimal, as are the amount of jobs they produce,” Beene told Newsweek. “Unfortunately, even when tariffs are introduced with good intentions, they normally rest on more costs being passed along to the consumer.”