President Donald Trump has said that tariffs won’t lead to higher prices. But the United States economy seems to disagree: Inflation, which has remained fairly tame, is slowly creeping up because of tariffs.
Trump’s latest round of higher taxes on imports, which goes into effect next week, will immediately make imported goods from impacted countries more expensive in the United States.
And while businesses have tried to shoulder part of the cost, they now may be forced to pass along some of those expenses to consumers. That means higher prices for Americans.
Here’s what could get more expensive:
Computers and other electronics
Computers are among the top goods the United States imported last year, according to US Commerce Department data. The top countries that exported computers and other electronic products to the United States last year were China, Mexico, Taiwan, Vietnam and Malaysia.
Goods from China already face a minimum 30%, albeit with some exclusions. However, rates could soon shoot even higher if a trade deal is not reached with China by August 12. Goods from Mexico can be shipped to the US duty-free if they comply with a trade deal Trump signed during his first term.
Meanwhile, goods from Taiwan, Vietnam and Malaysia are all set to be taxed at nearly double their current levels by next week.
Though price increases have been tame across the board, computers cost consumers nearly 5% more in June of this year compared to last, according to Consumer Price Index data.
While not among the top five sources of foreign-produced computers, India is still a major supplier of computers and other electronics to the US. Goods from there are set to face 25% minimum tariffs.
Economists at the Yale Budget Lab estimate that the tariffs Trump announced as of Thursday, if put in place indefinitely, could cause computer and other electronic prices to rise by 18.2% in the short run and 7.7% in the long run. The authors consider the short run to be two to three years from now, while the long run is considered three to ten years.
As with electronics, America buys much of its apparel from other countries. Top destinations include China, Vietnam, Bangladesh, India and Indonesia.
The tariffs Trump is placing on these countries are impactful for the cost clothing, especially since that’s one of the top goods the US imports overall.
Yale Budget Lab estimates prices could rise by 37.5% in the short run and 17.4%.
Wristwatches are one of the top exports to the United States from Switzerland, which is set to face a 39% “reciprocal” tariff. Last year the country sent over $4 billion worth of watches to the United States.
Prices of leather products, which often includes watches, are estimated to rise by 39.7% in the short run and 18.9% in the long run.
China, Vietnam and Indonesia are top destinations where shoes are made and tariffs are set to start at a minimum of 19% for the three countries, come next week.
Like watches, many kinds of shoes use leather and could face similar price increases as a result.
Vietnam is the top source of imported furniture, followed by China.
China and Vietnam are the top two countries that ship toys to the United States. Toy brands have already been warning of higher prices due to the tariffs in place on Chinese goods. The higher tariffs on Vietnamese goods are also likely to be a pressure point.
In addition to the fact that businesses haven’t been fully passing on tariff costs to consumers thus far, in anticipation of higher import taxes, many spent months stockpiling goods.
That’s in part why Goldman Sachs economists estimate it takes eight months for the effect of the costs of imported consumer goods “to be fully realized in consumer prices.”
