Experts warn Trump tariffs could depress U.S. economy
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Bill Mohler can see hard times coming.
Co-owner of Sendell Volkswagen, east of Greensburg, Mohler said President Trump’s expected 25% tariff on goods from Mexico and Canada will have a dramatic impact on his business.
“It will mean the price of cars and parts could go up 25%,” Mohler said of the tariffs, set to begin Saturday. “We don’t know if this is simply a bargaining chip, we just don’t know yet. These tariffs could end up having unintended consequences.”
The White House confirmed Friday that new tariffs would be assessed on goods imported from Mexico, Canada and China.
And while it’s not clear what might be exempt from the tariffs — such as fuel or energy imported from Canada — experts said the end result is likely to be more money out of the pockets of U.S. consumers.
Westmoreland County Chamber of Commerce Executive Director Dan DeBone said his members are nervous the tariffs will lead to increased prices and negative impacts on local businesses.
“Nobody knows for sure what this means, but we’re hoping this is something that will be reduced or rescinded,” DeBone said. “We are concerned for small businesses and larger corporations.”
Throughout his presidential campaign, Trump advocated for tariffs as a means to increase U.S. manufacturing. Trump has more recently suggested the new tariffs are in response to illegal immigration and fentanyl production.
Erica Owens, an associate professor at the University of Pittsburgh Graduate School of Public and International Affairs, said Trump’s tariffs could undercut the U.S. economy.
Imports ranging from electronics, automobiles and produce from Mexico and lumber from Canada could be impacted.
Those two countries and China are the top trading partners of the U.S., she said.
“A tariff is a tax, and we will see our costs increase,” she said. “It will disproportionately affect lower-income folks.
“It could also affect millions of jobs that are supported by trade through reciprocal tariffs on U.S. goods imposed by Mexico, Canada and China.”
Studies suggest Trump’s tariffs could cost U.S. consumers about $1,300 a year in added costs for goods, Owen said. He said that suggests the new levy could lead to inflation and shortages of goods on the shelves.
“Trump has been pretty blunt saying these tariffs are to address non-trade-related issues,” she said.
Mohler said that, because about half of all Volkswagens sold in the U.S. are manufactured in Mexico, he expects the cost of the vehicles he sells to increase.
Price increases for electronics and produce such as tomatoes and avocados grown in Mexico are expected to be passed on to consumers.
Canada is a major supplier of energy and lumber to the U.S., and tariffs could result in higher costs to fill vehicles and to build and repair homes, according to Stacy Rosenberg, an associate professor of public policy at Carnegie Mellon University.
The tariffs could lead to higher inflation.
“This is effectively a tax on Americans and companies,” Rosenberg said. “The No. 1 issue for voters was the economy and the cost of day-to-day expenses. Imposing tariffs is in complete opposition to what voters said they wanted.”
For consumers, it’s unclear when the cost of everyday items will increase as a result of the tariffs.
Joe Incardona, vice president and co-owner of Inco Beverage, a wholesale beer distributor in Greensburg and Johnstown, said he has enough inventory on hand for the next two to three months so he does not expect to have to increase prices in the near future.
But much of what he sells is imported from Mexico and Canada, so how the tariffs will impact his business in the long term has yet to be seen.
“If the costs go up, suppliers will have to determine how much of that will be passed on to consumers,” Incardona said. “We’re going to carry these products one way or the other.”