How Trump’s Tariff Plans Could Burden American Consumers

If you’re one of those people who tends to glaze over at the mention of tariffs, you’re not alone. The term itself often conjures images of dry economic discussions, but the stakes are very real—and they could hit your wallet hard if former President Trump returns to office.

Several studies show that the cost of Trump's 2018 tariffs were borne almost entirely by American consumers and businesses.

While numerous economists have sounded the alarm over the detrimental effects of tariffs, it might be more impactful to listen to the executives of the companies that manufacture the goods you use daily. Their message is clear: if Trump reinstates his sweeping tariff policies, you can expect to pay more for essential products. The exact price increases and their speed are uncertain, but there’s no doubt that everyday items will become more expensive.

Philip Daniele, CEO of AutoZone, highlighted this during a recent earnings call, stating, “If tariffs are enacted, we will pass those costs directly onto consumers.” He added that they will preemptively raise prices once they determine the necessary markup.

To break it down: tariffs are essentially taxes levied on imported products—including clothing, footwear, toys, automotive parts, and appliances. The burden of these taxes doesn’t fall on foreign manufacturers but rather on American companies that import these goods. Consequently, it’s consumers like you who ultimately foot the bill.

Trump’s aggressive trade agenda threatens to further inflate the costs of imported goods. This isn’t merely a hypothesis; historical data supports this conclusion, and the last six years of trade dynamics illustrate the consequences.

In 2018, Trump introduced tariffs ranging from 30% to 50% on imports from China, prompting retaliatory tariffs from China on U.S. products like aluminum, airplanes, automobiles, pork, and soybeans. This initiated a protracted trade conflict with far-reaching implications.

Though the impact may not have been immediately apparent, the COVID-19 pandemic complicated global supply chains, exacerbating price increases. Multiple studies have shown that the costs of these tariffs have primarily been borne by American consumers and businesses, with the average household paying nearly $500 more annually by late 2019.

Looking ahead, Trump’s plans for a potential second term include a sweeping 20% tariff on all imports—an unprecedented move—and even steeper tariffs of 60% on goods from China and other significant trading partners. Research from the Peterson Institute for International Economics suggests that these policies could impose an additional annual cost exceeding $2,600 on the typical middle-income U.S. household.

Despite Trump’s repeated assertions that foreign entities would bear these costs, the reality is quite different. At best, one could interpret his approach as an attempt to incentivize U.S. businesses to bring operations back to American soil, ostensibly creating jobs. However, higher U.S. labor costs would likely lead to increased prices, countering the intended benefits.

Even if tariffs could reverse decades of globalization, the likelihood of achieving the desired outcomes remains slim.

Trump’s vision encompasses sweeping reforms across trade, taxation, and immigration. Yet, many economists caution that such drastic measures are unwarranted and could potentially harm the U.S. economy instead.

Timothy Boyle, CEO of Columbia Sportswear, articulated skepticism regarding the effectiveness of tariffs in boosting domestic production. He remarked, “The idea that tariffs will enhance U.S. manufacturing in sectors like footwear and apparel is misleading. Many of these products already face high tariffs, yet we haven’t seen a corresponding increase in domestic investment.”

In a recent interview with the Washington Post, Boyle was straightforward about the impending price increases: “We’re sourcing products today for delivery next fall, and we’ll have to raise prices accordingly. It will be extremely challenging to keep products affordable for Americans.”

It’s worth noting that not all products will experience immediate price hikes. Larger companies with substantial profit margins may absorb some costs before passing them along to consumers.

Take, for example, Trump’s own venture, the Trump Bible, which the Associated Press recently reported is printed by a company in China. While this is common in the publishing industry, it’s ironic given Trump’s consistent criticism of China’s trade practices. The AP discovered that each $59.99 Trump Bible costs less than $3 to produce.

With such significant profit margins, the Trump-owned company behind these Bibles could potentially absorb tariff costs without raising prices.

Meanwhile, large retailers like Walmart and Target are often able to maintain stable prices due to their scale, allowing them to negotiate favorable terms with suppliers.

In contrast, small businesses—responsible for employing nearly half of the American workforce—are in a precarious position. With thinner profit margins, they lack the flexibility to absorb rising costs, forcing them to either increase prices or make drastic cuts, which could lead to layoffs.