The Trump Tariff Effect: What Products Will Cost More?

President Donald Trump this week announced sweeping new tariffs, including a 10 percent tax on imports from all countries and higher tariff rates on dozens more.

Trump, in an announcement Wednesday, said the "reciprocal tariffs" are aimed to promote domestic manufacturing and narrow the gap with the tariffs the White House says other countries unfairly impose on American-made products.

However, many economists warn the action could mean U.S. consumers can expect to pay more for many necessities, such as food, clothing, and energy. And those impacts will be felt most severely by lower-income Americans, a new analysis from the Yale Budget Lab suggests.

The reciprocal tariffs, which range from 10 percent to 46 percent, are set to take effect April 9. The average tariff rate the United States charges would increase to roughly 22 percent from 2.5 percent in 2024, according to Olu Sonola, head of U.S. economic research at Fitch Ratings. That’s the highest tariff rate since 1909.

“Many countries will likely end up in a recession,” Sonola told The Associated Press. "You can throw most forecasts out the door if this tariff rate stays on for an extended period of time.”

CNBC has a full list of reciprocal tariffs, including the tariffs other countries charge the United States. If they take effect, U.S. businesses are likely to pass the increased costs onto consumers, sparking fears of a recession or “stagflation,” a combination of high inflation, stagnant economic growth and high unemployment.

What Costs Would Increase?

The Yale Budget Lab study suggests lower-income Americans would take the biggest hit because they spend a greater share of their income.

Specifically, households with an average disposable income of around $43,000, among the lowest in the country, would see their disposable income drop by 2.3 percent with the new tariffs and by 4 percent with all 2025 tariffs included, the Yale study said.

The wealthiest Americans — those with $500,000 or more disposable income — would see a decline in disposable income of 0.9 on the new tariffs and 1.6 percent overall, according to the study.

The previously announced tariffs impose 25 percent taxes on auto imports, levies against China, Canada and Mexico and expanded trade penalties on steel and aluminum. Trump has also imposed tariffs on countries that import oil from Venezuela and he plans separate import taxes on pharmaceutical drugs, lumber, copper and computer chips.

The Yale researchers said clothing prices could increase by 8 percent as a result of Wednesday’s tariffs, and 17 percent from all U.S. tariffs.

Food prices are also disproportionately affected by the tariffs and would increase another 1.6 percent, which is roughly equivalent to the last 12 months of inflation on grocery prices, the researchers said. Grocery prices are expected to go up 2.8 percent overall from all 2025 tariff actions, with fresh produce up 4 percent overall.
Wednesday’s tariffs leave motor vehicle prices largely untouched, but they are up about 8.4 percent due to the earlier tariffs, resulting in an average increase of $4,000 in the sticker price of new cars, according to the study.

Wall Street Reacts

Wall Street shuddered, and a level of shock unseen since COVID’s outbreak tore through financial markets worldwide Thursday on worries about the damage President Donald Trump’s newest set of tariffs could do to economies across continents, including his own.

The S&P 500 sank 4.8 pecent, more than in major markets across Asia and Europe, for its worst day since the pandemic crashed the economy in 2020. The Dow Jones Industrial Average dropped 1,679 points, or 4 percent, and the Nasdaq composite tumbled 6 percent.

Little was spared in financial markets as fear flared about the potentially toxic mix of weakening economic growth and higher inflation that tariffs can create.

Everything from crude oil to Big Tech stocks to the value of the U.S. dollar against other currencies fell. Even gold, which hit records recently as investors sought something safer to own, pulled lower. Some of the worst hits walloped smaller U.S. companies, and the Russell 2000 index of smaller stocks dropped 6.6 percent to pull more than 20 percent below its record.

Investors worldwide knew Trump was going to announce a sweeping set of tariffs late Wednesday, and fears surrounding it had already pulled Wall Street’s main measure of health, the S&P 500 index, 10 percent below its all-time high. But Trump still managed to surprise them with “the worst case scenario for tariffs,” according to Mary Ann Bartels, chief investment officer at Sanctuary W

What Happens Next?

Trump bypassed Congress by declaring a national emergency, which isn’t reviewable by courts. But Congress can terminate it. Four Republicans — Sens. Lisa Murkowski of Alaska, Susan Collins of Maine, and Rand Paul and former GOP leader Mitch McConnell, both of Kentucky — have joined Democrats in trying to undo the tariffs.

Paul, independent Sen. Angus King of Maine, and five Democrats led by Sen. Tim Kaine of Virginia are co-sponsors of the one-sentence resolution that terminates. the emergency declaration.

The Associated Press contributed reporting.