Possible price increases by Trump's customs plan

Possible price increases by Trump's customs plan

New import taxes are expected to increase significantly under the upcoming Trump administration, which means that Americans have to pay more for everything from foreign sneakers and toys to food, as a current study shows.

effect of the new tariffs

The articles that will be most affected by price increases are usually those that currently have low tariffs and mainly come from China, according to the Peterson Institute for International Economics in a report published on Thursday, which was first shared with CNN.

The researchers found: "The only certainty is that new tariffs will be expensive for the United States."

The greatest burden due to import taxes would apply according to the analysis of the Peterson Institute for Machines, Electronics and Electrical Machines. These goods come disproportionately from China and are currently enjoying low customs tariffs.

Trump’s trade strategy

It is still too early to say whether Trump will actually enforce these tariffs or whether agreements can be made to prevent this.

"In his first term in office, President Trump introduced tariffs against China, who created jobs, boosted investments and did not result in any inflation," said Karoline Leavitt, spokeswoman for Trump's transition team, in a statement to CNN. "President Trump will quickly work to repair and restore an economy that puts American workers in the first place by recovering American jobs, reducing inflation, increasing real wages, reducing controls, reducing regulation and strengthening American energy production."

effects on consumers and companies

The analysis of the Peterson Institute showed that consumers have to expect higher costs for imported goods, including electrical devices, toys and sporting goods. Companies are also burdened with new taxes for importing transport equipment, chemicals and other articles.

toys and shoes are particularly susceptible to the threats with tariffs from Trump. Around 99 % of the shoes sold in the USA are imported, as the Footwear Distributors & Retailers of America, a trading group that represents brands such as Nike, Steve Madden and Cole Haan. More than half (56 %) of the shoes sold in the USA come from China.

The USA also rely on China for toys and sports equipment; Around 75 % of imported toys and sports equipment come from China. According to the findings of the Peterson Institute, it would be difficult to replicate China's "dominant position" in toy production without violating the US product security standards.

price increase through tariffs on Mexico and Canada

The proposed tariffs from Trump on Mexico and Canada would strongly influence the prices for cars, vegetables, fuels, prepared food and animal products.

The United States relates 89 % of its imported avocados and 91 % of the tomatoes from Mexico grown abroad, as the US Ministry of Agriculture explains. "Higher tariffs on Mexico and Canada ... Press food prices in the USA," says the study by the Peterson Institute.

During the election campaign, Trump promised to let prices sink and emphasized that his customs plan would not rekindle inflation. Nevertheless, Trump refused to guarantee in a recent NBC interview that American families no longer have to pay due to his tariffs.

"I can't guarantee anything. I can't guarantee anything tomorrow," said Trump. "But I can say that ... I raised a lot of tariffs to many different countries, especially in China. We took hundreds of billions of dollars and had no inflation."

economic forecasts

Although there was inflation during Trump's first term, it was not unusually high. Nevertheless, mainstream economists continue to warn that the consumers ultimately have to pay more through the tariffs.

Companies such as Target, Wal-Mart, Autozone and Columbia Sportswear have already indicated that they are expected to pass on the costs for higher tariffs to consumers in the form of higher prices. The Study of the Peterson Institute showed that the "final impact" on the prices is determined by the demand for imports and shifts on offer, but there are "clear evidence that tariffs were completely passed on to importers during the trade war between the USA and China".

"The American consumers and companies will feel the effects of the higher tariffs, which brings significant costs for the average American budget, and a burden that falls more on households with lower incomes", the researchers of the Peterson Institute.