Donald Trump’s proposed tariff increases aim to boost U.S. manufacturing but carry potential risks. Economists warn these measures could drive up prices for consumers and fuel inflation.
Trump has pledged to lead a “manufacturing renaissance” if re-elected, with tariffs as a key strategy. These tariffs would raise the cost of imported goods, making U.S.-produced products more competitive. While this appeals to some manufacturers, experts caution that the broader economic impact could include inflation, higher interest rates, and increased costs for consumers.
“It does offer some protection for manufacturers,” said Gary Schlossberg, global strategist at Wells Fargo Investment Institute. “But inflation may offset those benefits, depending on your role in the supply chain.”
Inflation Concerns and Consumer Costs
During his presidency, Trump imposed tariffs on goods like solar panels, washing machines, and metals. President Joe Biden kept many of those tariffs and added new ones targeting Chinese imports such as electric vehicles and semiconductors. Trump now proposes universal tariffs of up to 20% on all imports and even steeper rates on Chinese goods.
“We’re going to lead an American manufacturing boom,” Trump declared in a recent speech. He emphasized that tariffs would encourage foreign companies to move production to the U.S.
However, economists warn that tariffs often lead to higher costs for businesses, which then pass these costs to consumers. Retailers like Autozone and Stanley Black & Decker have already indicated they would raise prices to offset increased expenses.
According to the Peterson Institute for International Economics, the proposed tariffs could cost American households over $2,600 annually. The National Retail Federation estimates they would reduce U.S. consumer purchasing power by $46 billion to $78 billion each year. For instance, a $50 pair of athletic shoes could rise to $64, and a $2,000 mattress could cost up to $2,190.
“While tariffs may help certain manufacturing sectors, they’re ultimately detrimental to the broader economy,” Schlossberg said. Matt Bigelow, president of Vermont Flannel, voiced concerns about inflation’s effects on his business. “We’ve all felt inflation’s impact. Higher tariffs increasing consumer prices is definitely a concern,” he said.
Tariffs and the Global Economy
Stephen Liquori, CEO of Goodwear USA, sees both pros and cons to Trump’s tariff plan. While higher tariffs could make his American-made products more competitive, he worries about passing costs to consumers.
“There are many things we don’t or can’t make here,” Liquori explained. “It’s a global economy, and tariffs aren’t always the best solution.”
Some manufacturers, however, remain optimistic. Drew Greenblatt, president of Marlin Steel, believes tariffs could drive job growth. “If tariffs go as planned, I’ll need to double my staff,” he said, noting the potential for reclaiming jobs lost to cheaper imports.
A Coalition for a Prosperous America study suggests a universal 10% tariff could create 2.8 million jobs. Yet, the Brookings Institution found that gains in some industries during Trump’s first term were offset by losses in others reliant on imports or targeted by retaliatory tariffs.
Bayard Winthrop, CEO of American Giant, supports tariffs but urges a gradual approach. “A universal 20% tariff on day one would be devastating,” he said. Winthrop believes measured increases could rebuild U.S. industrial capacity and create jobs. “Yes, costs will rise, but it’s necessary to strengthen the middle class and industrial workforce,” he added.
Scott Paul, president of the Alliance for American Manufacturing, agrees that tariffs could help decouple the U.S. economy from China. “Targeted tariffs on certain Chinese products are an important policy step,” Paul said. He emphasized the need for strategic action to reduce reliance on imports and bolster domestic industries.