In the weeks since winning the election, Trump has doubled down on his promise to impose steep tariffs on trade partners. He’s proposing a 10-20 percent tariff on imports from Canada, China, and Mexico. Global economists say this will reduce trade and distort consumer production worldwide.
Following Trump’s victory, Google searches for “What are tariffs?” skyrocketed. Tariffs increase the price of foreign goods to encourage domestic purchasing. They increase profits for domestic producers and spike the cost of goods for consumers.
Short-term impacts include price gouging as distributors attempt to compensate for the increased price of the foreign goods they import. Unemployment also spikes as businesses seek to remain competitive.
The long-term effects are a shrinking economy due to fewer jobs and investments. By insulating the domestic market, tariffs also reduce productivity. With American manufacturers given an edge against foreign producers, there is less desire to innovate.
Tariffs aren’t new—Trump imposed several during his first term. The firms that benefited the most also donated to Republican candidates and were more likely to receive exemptions than those that donated to Democrats.
Trump’s second-term tariffs will hurt the US economy but cause other countries to retaliate, potentially starting a global trade war. When US exports are limited, incomes suffer. The Peterson Institute for International Economics suggests retaliatory tariffs could double the anticipated economic losses to hit the US economy.
So, what products can we expect to become more expensive after Trump takes office? Tariffs on Canada’s main export to the US, crude oil, will significantly increase pump prices as American crude oil supplies deplete. The impacts for Canadians could be even more significant, as the US is one of their biggest trade partners.
Tariffs on China, which exports most electronics to the US, will increase the cost of technology. Even for US producers, prices will increase as they import small parts from China. Mexico exports many automotive parts, significantly increasing the costs of new cars.
The impacts of these tariffs will increase over time as countries worldwide work to adjust to US trade penalties. Experts recommend stocking up on goods like batteries, which may soon cost much more.
