Trump’s Tariff Plans: What His Presidency Means for Consumers and Producers

Attention has increasingly turned to President-elect Donald Trump’s plan to increase tariffs in the United States, including raising tariffs to 60% for China. 

Tariffs are designed to help local companies compete with foreign producers and generate revenue for the government imposing them. They also incentivize companies to manufacture goods locally, creating more job opportunities for the local economy. However, finding it more profitable to pay the tariffs, the price of goods increases, ultimately making the consumer pay more.

Since around 70% of goods sold in the United States are produced abroad, tariffs encourage companies to produce locally. When tariffs are imposed, their impact on consumers can vary. Trump’s goal is to set tariffs high enough to erode firms’ profits, compelling them to manufacture in the United States, which would create more jobs and boost the domestic economy. 

Alternatively, high tariffs may push wholesalers to lower their prices to remain competitive, allowing American companies to continue purchasing their goods. In this scenario, the increased tariff revenue collected by the U.S. government could offset taxes in other areas, potentially benefiting taxpayers. 

On the other hand, if companies find it too expensive to switch to domestic production, they will continue their overseas production and pay the tariffs. Companies can do this by increasing their selling prices so the consumer pays off the tariffs, hurting the consumer. Additionally, tariffs could trigger trade wars, as other countries may impose their own tariffs on American exports, decreasing the demand for American goods and ultimately weakening the economy. 

It remains uncertain exactly how Trump’s plan will unfold. During his first term in 2018, Trump implemented multiple tariffs, including one on washing machines, which led to higher prices for consumers. Another 2018 tariff on steel had a similar effect on prices, but some experts argue it helped slow the decline of the steel job market. Despite criticism from political opponents, many of Trump’s tariffs were still kept in place during the Biden administration, and are still in action today. The long-term impact of these tariffs may take several years to materialize, but their influence on various industries and daily life in the US is worth monitoring in the future.