Trump’s proposed tariffs might drive up meals costs, consultants say

Former JPMorgan Chase chief economist Anthony Chan reacts to Kamala Harris saying it is going to be her ‘Day One precedence’ to carry down costs regardless of already being in workplace on ‘Varney & Co.’

A crucial concern amongst economists is that President-elect Donald Trump’s proposed blanket tariffs on imports would drive up meals costs. 

Trump campaigned on the promise to decrease prices for households as bills have surged throughout the economic system. Groceries had been no exception, with costs rising because of a mix of financial elements, together with geopolitical tensions, climate occasions, provide chain disruptions and inflation.

Whereas the tempo of inflation has eased, rising 2.6% in October, grocery prices are between 20% to 25% greater than they had been 4 years in the past. 

WALMART WARNS OF HIGHER PRICES IF TRUMP IMPLEMENTS PROPOSED TARIFFS

The proposed 10%-20% tariff on imports from all international international locations together with a further proposed 60%-100% tariff on imports particularly from China might exacerbate the scenario as buyers would bear the brunt of the elevated prices, David Ortega, meals economist and professor at Michigan State College instructed FOX Enterprise. 

When lower-income households spend a bigger share of their earnings on meals, they are going to be pressured to make troublesome trade-offs resembling chopping again on different necessities like housing, well being care or transportation to make sure they’ll nonetheless put meals on the desk, Ortega stated. 

“Tariffs drive up the cost of goods domestically by increasing production costs and reducing competition. Ultimately, the higher costs get passed along to consumers, with low-income households again bearing the brunt of the burden,” Ortega stated. 

Trump-Vance transition spokeswoman Karoline Leavitt instructed FOX Enterprise that in Trump’s first time period, the tariffs imposed on China “created jobs, spurred investment and resulted in no inflation.” 

Signage within the produce part of the Goal Corp. flagship retailer in Edina, Minnesota, US, on Thursday, Sept. 5, 2024.  (Ben Brewer/Bloomberg by way of Getty Pictures / Getty Pictures)

She stated Trump plans to revive the economic system by partly “re-shoring American jobs, lowering inflation, raising real wages, lowering taxes, cutting regulations and unshackling American energy.” 

TRUMP’S TARIFFS WOULD DRIVE UP CONSUMER PRICES: NATIONAL RETAIL FEDERATION

Duke College economics professor Felix Tintelnot stated that because the proposed import tariff can be imposed on all international locations, “one cannot relocate production to bystander countries” to keep away from pushing the upper prices onto customers. 

A lady looking for groceries in Brooklyn, New York, on Sept. 15, 2023. (Paola Chapdelaine for The Washington Submit by way of Getty Pictures / Getty Pictures)

As an example, in 2018, when import tariffs had been imposed on all international locations exporting washing machines or metal to america, it yielded massive worth will increase for customers, in line with Tintelnot.

If tariffs are imposed, not solely would the price of meals gadgets that home producers import rise, however different enter prices like fertilizer, farm gear and elements that meals producers use can be impacted.

TJ MAXX CEO SAYS COMPANY COULD BENEFIT FROM TRUMP’S PROPOSED TARIFFS

Tintelnot stated that if international meals costs go up due to tariffs, home producers may also increase their costs to reap the benefits of the elevated demand for his or her merchandise.

Apples are displayed at a grocery retailer on June 11, 2024, in San Anselmo, California. (Justin Sullivan/Getty Pictures / Getty Pictures)

However Ortega warned that the levies might result in different penalties, together with retaliatory tariffs from different international locations.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

“As for retaliation, recent history shows us that other countries won’t sit back quietly,” he stated. 

Ortega referenced the U.S.-China commerce conflict six years in the past when China responded with retaliatory tariffs that impacted American farmers.

Retaliatory tariffs precipitated a discount of greater than $27 billion (or annualized losses of $13.2 billion) in U.S. agricultural exports from mid-2018 to the tip of 2019, in line with 2022 information from the Agriculture Division. China accounted for about 95% of the losses, the division stated.