‘We’re in for a good old-fashioned trade war here’: How Trump’s tariffs could be costly
President Donald Trump plans to impose tariffs on Mexico, Canada and China on Saturday.
The move is seen as an effort to pressure America’s largest trading partners into cracking down on illegal immigration and fentanyl smuggling over U.S. borders.
However, economists are warning that the moves could backfire and hit American consumers with higher prices on goods such as gas, pickup trucks and Super Bowl party guacamole dip.
Paul Brandus, finance columnist with Dow Jones/MarketWatch, joined WTOP’s Ian Crawford on Saturday morning to discuss how Trump’s tariffs could cost Americans millions of dollars.
This Q&A has been lightly edited for length and clarity.
Paul Brandus, finance columnist with Dow Jones/MarketWatch, joined WTOP’s Ian Crawford to discuss how Trump’s tariffs could cost Americans millions of dollars.
Paul Brandus: It’s going to be a 25% tariff on goods from Mexico, in Canada — smaller on China — 10% tariff on Chinese products. This is a familiar pattern.
These countries — Canada, Mexico, China — are America’s biggest trading partners. All three have said they will retaliate with tariffs on their own.
So it looks like we’re in for a good old-fashioned trade war here, and history tells us that consumers will wind up paying the price in the form of inflation.
It’s also worth remembering, by the way, that tens of millions of American jobs depend on trade. So, depending on the length and severity of this tariff war, American consumers will likely feel the pinch, just like they did in Trump’s first term.
Ian Crawford: Now, both Prime Minister (Justin) Trudeau, of Canada, and President (Claudia) Sheinbaum, of Mexico, say they are ready to retaliate. What’s that going to do for consumer prices in the short term and in the midterm?
Paul Brandus: Well, again, it depends on the length and severity of this tariff war.
But everything from the avocados you might buy for your Super Bowl party next week to automobiles — all kinds of consumer goods, just about everything, in fact — could be hit here.
Trump has called ‘tariff’ the most beautiful word in the dictionary — I’m not sure what dictionary he’s using. But, history suggests that if this tariff war has any type of length and severity attached to it, they’re going to raise prices and kill jobs.
I’ll give you just one example here. The Tax Foundation here has estimated that these tariffs could cost Americans more than $100 billion and cut economic growth by nearly one-half of 1%. We saw this kind of thing, again, during his first term.
The upside here, and being a little cynical here, is that lobbyists here for every industry under the sun are going to rack up big fees, I think, pressuring the White House for carve-outs for their particular industry. So that’s where things stand at the moment.
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