President Donald Trump’s sweeping new tariffs mark a reversal of decades of global trade liberalization. Economists warn that these measures could cost American consumers thousands of dollars annually while significantly slowing the U.S. economy.
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The White House is betting that the economic strain on other countries will push them to open their markets to more U.S. exports, ultimately leading to negotiations that could ease the newly imposed tariffs.
Alternatively, the administration hopes that businesses will shift away from global supply chains and relocate production to the United States to avoid the higher import taxes.
A key challenge for the Trump administration will be how Americans respond to the tariffs. If consumers face noticeable price increases and job losses, public opposition could mount, making it difficult to maintain the tariffs long enough to incentivize companies to return to the U.S.
According to the Yale Budget Lab, these tariffs could cost the average household $3,800 in higher prices this year. This estimate includes the new 10% universal tariff, steep tariffs on roughly 60 countries announced Wednesday, and existing import taxes on steel, aluminum, and automobiles. Economists at Nationwide Financial project that inflation could rise from 2.8% to over 4% this year, with economic growth nearly stagnating.
Investors reacted negatively to the new tariffs on Thursday, sending the S&P 500 down 4.8% by the close—its worst drop since the pandemic. The Dow Jones Industrial Average tumbled more than 1,600 points.
"I think it’s going very well," he said. "It’s like a major operation—when a patient undergoes surgery, it’s a big deal. I said from the start this would happen exactly this way."
Economists estimate that once fully implemented on April 9, the average U.S. tariff could climb to nearly 25%—the highest level in over a century, surpassing the infamous 1930 Smoot-Hawley tariffs, which are widely blamed for deepening the Great Depression.
"The president has effectively announced the separation of the U.S. economy from the global economy," said Mary Lovely, senior fellow at the Peterson Institute for International Relations. "This sets the stage for higher prices and slower growth in the long run."
Commerce Secretary Howard Lutnick defended the tariffs, arguing they would push other nations to open their markets to U.S. exports.
"I expect most countries will start seriously reconsidering their trade policies toward the United States and stop taking advantage of us," he said on CNBC Thursday. "This is a restructuring of fair trade."
Americans Divided on Tariffs' Impact
Reactions to the new tariffs remain mixed.
Bob Lehmann, 73, who was shopping at a Best Buy in Portland, Oregon, on Wednesday, opposed the policy. “They’re going to raise prices and make everyday life more expensive,” he said.
Mathew Hall, a 64-year-old paint contractor, had a different perspective, calling the tariffs a “great idea.” While acknowledging potential short-term price increases, he believed they were worth it. “In the long term, it’s going to be good,” he said, adding that he felt the U.S. had been taken advantage of in trade.
However, a former trade official from Trump’s first term, speaking anonymously, warned that even Trump supporters might struggle with the economic impact of the steep duties.
“Americans have never faced tariffs like this,” the official said Thursday. “The downstream effect on clothing and shoe stores will be significant. The question is how long Trump voters will continue to support these policies.”
Meanwhile, the economic fallout has already begun. On Thursday, automaker Stellantis—owner of Jeep, Citroën, and Ram—announced a temporary halt in production at its plants in Canada and Mexico due to Trump’s 25% tax on imported cars. As a result, the company is temporarily laying off 900 workers in Michigan and Indiana.
Some foreign exporters may lower their prices to help absorb the tariffs, and U.S. retailers might take on some of the costs as well. However, most economists expect the bulk of the tariffs to result in higher prices for consumers.
Clothing, Shoes, and Furniture Likely to Get More Expensive
The tariffs will hit many Asian countries particularly hard. Duties on Vietnamese imports will rise to 46%, Indonesian imports to 32%, and some Chinese goods will face tariffs as high as 79%. These three nations are the largest suppliers of footwear to the U.S., with Nike producing about half of its shoes and a third of its clothing in Vietnam last year.
The Yale Budget Lab estimates that Trump’s tariffs this year will drive clothing prices up by 17%.
Furniture and Retailers Brace for Higher Costs
On Thursday, the Home Furnishings Association, which represents over 13,000 U.S. furniture stores, warned that tariffs could increase furniture prices by 10% to 46%. Vietnam and China, the top furniture suppliers to the U.S., are expected to take the hardest hit.
Manufacturers in Asia are attempting to offset some of the costs by discounting products and lowering ocean freight rates, but those efforts won’t be enough to prevent price hikes. Even domestically made furniture relies on imported components.
“While many in the industry support the long-term goal of reshoring manufacturing, the reality is that it will take at least a decade to scale domestic production,” said Home Furnishings Association CEO Shannon Williams. “Permitting, training a skilled workforce, and managing the higher costs of U.S. manufacturing are significant hurdles.”
Tariffs Trickle Down to Small Businesses
At Gethsemane Garden Center in Chicago, Canadian-grown tulip, daffodil, and hyacinth bulbs fill the shelves, though imported plants make up only about 5% of its stock. Thousands of lemon cypress trees from Canada are sold year-round, along with Canadian mums in the fall.
Regas Chefas, whose family has owned the garden center for decades, said customers won’t bear the full brunt of the tariffs.
“We’re going to absorb some of the increase. The growers will absorb some, and then the customers will pay a little bit more,” he explained.
Essential Imports Face Uncertainty
The Consumer Brands Association, representing companies like Coca-Cola, General Mills, Nestlé, Tyson, Procter & Gamble, and Colgate-Palmolive, noted that while most of their products are made in the U.S., certain essential ingredients must be imported.
Some raw materials, such as wood pulp for toilet paper, are scarce domestically. Other goods, like cinnamon, coffee, and cocoa, simply can’t be grown in the U.S. at scale.
“We encourage President Trump and his trade advisers to fine-tune their approach and exempt key ingredients and inputs in order to protect manufacturing jobs and prevent unnecessary inflation at the grocery store,” said Tom Madrecki, the association’s vice president of supply chain resiliency.
A Divided Public Opinion
Outside a Tractor Supply store south of Denver, two family members debated the tariffs from opposite political viewpoints.
Chris Theisen, a 62-year-old Republican, remained optimistic. “I feel a good change coming on. I feel it’s going to be hard, but you don’t go to the gym and walk away and say, ‘God, I feel great.’”
His great-nephew, Nayen Shakya, a Democrat, saw things differently. Working at a restaurant, he has already noticed menu prices rising to cover increasing ingredient costs.
“It’s really easy to say things in a vague way that everyone agrees with, but under the surface, it’s definitely more complex,” said Shakya. “The burden of these price increases is already falling on consumers.”
Listening to his nephew, Theisen acknowledged the challenge.
“I understand this side of it, too,” he said. “I ain’t got no crystal ball. I hope it works out good.”