While tariffs might sound like a tough-guy approach to global trade, the economic reality is far less impressive. The numbers don't lie. U.S. tariffs on China, Canada, and Mexico are expected to slash GDP by up to 0.4% and eliminate 309,000 jobs. That's before anyone even retaliates. And they will retaliate.
American households are footing the bill. Each family can expect to shell out between $830 and $2,000 extra annually. Not exactly pocket change. Your electronics? Up 11%. New clothes? That'll be 7.5% more. Even your car prices jump by 6%. And groceries aren't spared either. Fresh produce costs nearly 3% more. Thanks, tariffs.
The real cost of tariffs isn't theoretical—it's showing up in your shopping cart and monthly bills every single day.
The job market takes a beating too. If Canada and Mexico hit back—and why wouldn't they?—job losses could exceed 400,000. Wages are predicted to drop by 0.2% initially, with worse to come if trading partners decide they've had enough. Unskilled workers get hit hardest. Steel and aluminum tariffs are already wreaking havoc in manufacturing sectors.
Our neighbors are suffering too, but they won't take it lying down. Canada's energy sector faces serious downturns. Mexico's food and auto industries are reeling. Both countries have every reason to slap retaliatory tariffs on U.S. exports. When they do, our fuel and manufacturing exports will take the hit. Multiple economic studies confirm that the pass-through of tariffs to American consumers is nearly complete.
What about those policy goals? Reducing the trade deficit with China? Barely moved the needle. Using tariffs to address immigration or fentanyl? There's no logical connection. Alternative financial systems like stablecoins and CBDCs could eventually provide countries with ways to circumvent trade restrictions and reduce the impact of tariffs. And forget about more secure supply chains—they're now more disrupted than ever.
The global picture isn't prettier. China has already diversified its trade relationships. They care less about our tariffs now. Meanwhile, other countries are lining up to retaliate. The Biden administration kept many Trump tariffs in place, perpetuating the damage.
The verdict is clear. Tariffs don't force foreign companies to lower prices. They just make Americans pay more. Some tough-guy approach. The impact on daily necessities is particularly concerning as essential items like food and fuel will experience larger price increases, hitting lower-income families hardest.
