Here's what President-elect Trump's tariff plan may mean for your wallet...
Nearly half of all voters said they were worse off financially than they were four years ago, the highest level in any election since 2008, according to an NBC News exit poll.
But a cornerstone of Trump's economic policy — sweeping new tariffs on imported goods — would likely exacerbate the very Biden-era inflation Trump lambasted on the campaign trail, according to economists.
Americans stand to lose between $46 billion and $78 billion in spending power each year on products including apparel, toys, furniture, household appliances, footwear and travel goods due to the new tariffs, the National Retail Federation stated in findings released Monday.
"The adoption of across-the-board tariffs on consumer goods and other non-strategic imports amounts to a tax on American families," National Retail Federation CEO Matthew Shay said in a statement Wednesday. "It will drive inflation and price increases and will result in job losses."
"Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices," NRF Vice President of Supply Chain and Customs Policy Jonathan Gold said in a statement. "A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter. This tax ultimately comes out of consumers' pockets through higher prices."
Trump has said he plans to impose a 60% tax on goods from China and a 10% to 20% levy on all of the $3 trillion in foreign goods the U.S. imports annually. Such sweeping tariffs would reignite inflation, as they would mostly be paid by U.S. consumers, Treasury Secretary Janet Yellen has warned, offering a general view widely shared by other economists on both sides of the political aisle.
"A consistent theoretical and empirical finding in economics is that domestic consumers and domestic firms bear the burden of a tariff, not the foreign country," the nonpartisan Budget Lab at Yale University stated in an analysis published in mid-October.
Trump has repeatedly contended that foreign companies would foot the bill, telling a gathering last month at the Economic Club of Chicago that "the countries will pay" the tariffs. In reality, American importers pay the tariffs to the U.S. Customs and Border Protection agency when their goods cross the border.
"These policy steps would amount to regressive tax cuts, only partially paid for by regressive tax increases," and cost a typical middle-income household about $1,700 in increased taxes a year," according to economists at the Peterson Institute for International Economics. The proposed tariffs would shift tax burdens from the well-off to lower-income Americans, the nonprofit also stated in a policy brief published in August.
Trump has argued that tariffs compel American companies to make goods on U.S. soil rather than purchasing from foreign suppliers.
But some companies have other plans.
"If we get tariffs, we will pass those tariff costs back to the consumer," Philip Daniele, CEO of vehicle parts supplier AutoZone, told Wall Street analysts in an earnings call in late September. "We'll generally raise prices ahead of — we know what the tariffs will be — we generally raise prices ahead of that," Daniele said.
Stanley Black & Decker CEO Donald Allan Jr. said last week his tool-producing company has been planning for the possibility of additional tariffs on imports since the spring. "Obviously, coming out of the gate, there would be price increases associated with tariffs that we [would] put into the market."
Allan downplayed the idea of moving manufacturing back to the U.S., saying it would not be cost-effective.
The rate of inflation is currently declining, would be counterproductive to then turn around and go back to pulling one of those inflationary levers, which would be additional tariffs, at a time when the consumer's telling all of us, both politically in the election results, as well as from a consumer perspective: 'We don't want higher prices.'"
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