As financial markets around the world reeled Thursday following President Donald Trump’s latest and most severe volley of tariffs, one expert warned of an economic ripple effect on auto-related expenses and luxury items, among other consumer costs.
Little was spared as fear flared globally about the potentially higher inflation and weakening economic growth that tariffs can create. Prices fell for everything from crude oil and Big Tech stocks to small companies that invest only in U.S. real estate.
“We’re going to have ripple effects to the costs of used cars, repair costs, insurance costs, rental costs,” financial analyst Stephen Kates said in an interview. “And those ripples are going to continue for an unforeseen amount of time.”
Goods imported from dozens of countries and territories are now going to be taxed at sharply higher rates, and that is expected to drive up the costs of everything from cars to clothes to computers.
“I think people who have been shopping at maybe more brand names or for luxury items, they may move down market to a T.J. Maxx, to a Marshalls, to a Walmart,” Kates said.
These tariffs – which can run as high as 50% — are meant to punish countries for trade barriers that Trump says unfairly limit U.S. exports and cause it to run huge trade deficits.
Even countries with which the U.S. enjoys trade surpluses – meaning it sells to them more than it buys, such as the United Kingdom and Argentina – are being targeted with a minimum tariff of 10%. And the highest tariffs are landing on two tiny territories that trade little with America – the African kingdom of Lesotho and the French possession of Saint Pierre and Miquelon off Canada’s Atlantic coast.
For decades, global commerce abided by tariff rates agreed to by the U.S. and 122 other countries during the 1980s and 1990s. On Wednesday, Trump detonated that arrangement, saying that other countries had exploited the system and “ripped off” the United States for years, causing its once-mighty manufacturing base to shrink.
“Our country has been looted, pillaged, raped and plundered,” the president said in the Rose Garden.
Trump hits allies and poor countries
Between the so-called reciprocal and baseline tariffs, Trump hit allies and adversaries, rich and poor countries, and those open and closed to U.S. exports.
“It’s destroying our relationship with the rest of the world, basically, that we’ve had and we’ve enjoyed since World War II in many ways” consumer Stephanie Bartron told 7. “It’s a disaster and it’s stupid. It’s completely absurd.”
Even Singapore, perhaps the freest-trading economy in the world, is getting slugged with the 10% levies, belying Trump’s claims to be balancing other countries’ protectionist policies, said Scott Lincicome, a trade analyst with the libertarian Cato Institute.
“This is not reciprocal at all,” Lincicome said. “Getting to real numbers on foreign trade barriers and their effects on U.S. trade numbers would require lengthy investigations and would take months, if not years, to produce. … They might as well have pulled the numbers out of a hat.”
Taiwan, a U.S. ally, faces a 32% tariff, not much less than geopolitical rival China’s 34%.
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