Analysis of what could get more expensive under Trump’s sweeping tariffs?

Under Trump’s sweeping tariffs, several categories of goods and services could become more expensive:

1. Automobiles

• Imported Cars: Tariffs on imported vehicles could significantly increase their prices. For example, a 25% tariff on imported cars could lead to price increases of up to 31%, according to the Budget Lab’s analysis. This means that the average price of a new imported car could rise by thousands of dollars.
• Domestic Cars: Even domestic car prices could rise by 3.2% due to increased costs of imported parts and materials. This would affect both consumers and the automotive industry as a whole.

2. Electronics and Computers

• Imported Electronics: Tariffs on electronics and computer equipment could lead to price increases of up to 6.5% for imported goods. This would affect a wide range of products, including smartphones, TVs, and laptops.
• Domestic Electronics: Domestic producers might also raise prices by 0.8% due to increased costs of imported components

3. Energy Products

• Crude Oil and Gasoline: Long-term, crude oil prices could rise by 1.1%, and gasoline prices could increase by 1.3%, equivalent to an additional $0.04 per gallon. This would impact both consumers and industries reliant on energy.

4. Agricultural Products

• Fresh Produce: Prices of fresh produce such as vegetables, fruits, and nuts could rise by 1.8%. This would affect both domestic consumers and the agricultural sector.

5. Pharmaceuticals and Medical Devices

• Imported Medicines: Tariffs on imported pharmaceuticals and medical devices could lead to higher prices for these essential goods. This would impact healthcare costs and accessibility for consumers.

6. General Consumer Goods

• Clothing and Textiles: Tariffs on imported clothing and textiles could increase prices for these items. This would particularly affect low-income households, which spend a larger proportion of their income on basic necessities.
• Household Goods: A wide range of household goods, including furniture and appliances, could see price increases due to higher import costs

7. Economic and Fiscal Impact

• Inflation: The tariffs could lead to an overall increase in the price level, contributing to inflation. The PCE price level could rise by 0.72-0.76% before consumer substitution.
• Reduced Economic Output: In the long run, tariffs could reduce the size of the US economy by 0.2% in real terms. This would result in lower incomes and reduced economic growth.

8. Retaliatory Measures

• Counter-Tariffs: If other countries retaliate with their own tariffs, it could further increase the cost of imported goods and disrupt global supply chains. This would lead to higher prices for a broader range of products and services.

Conclusion

The proposed tariffs under the Trump administration could lead to significant price increases across various sectors, affecting both consumers and businesses. The impact would be felt most acutely by low-income households, who spend a larger share of their income on essential goods. Additionally, the potential for retaliatory tariffs could exacerbate these effects, leading to broader economic challenges.