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Business & Economy

The Big Story

Trump's new tariffs could boost prices, derail stocks

Many businesses and market forecasters have been warning that President Trump’s import taxes could translate into consumer price increases.

© The Associated Press

Trump kicked off a trade war Tuesday, levying major tariffs on the top three U.S. trading partners — Canada, Mexico and China.

He imposed 25 percent import taxes on Canada and Mexico and increased tariffs on China from 10 percent to 20 percent.

Tariffs don’t translate directly into price increases, and businesses can respond to them in various ways, including just eating the cost increase; Trump’s 2018 tariffs did not cause a major spike in inflation in the way that the 2020 coronavirus pandemic did.

But disruptions resulting from companies altering their supply chains over highly integrated North American production pipelines could result in higher consumer prices.

“Tariff-induced disruptions risk exacerbating inflation, increasing the cost of essential goods, and placing financial strain on businesses and consumers alike,” the National Association of Wholesale Distributors, a trade group, warned in a Tuesday statement.

One estimate from the Anderson Economic Group found that the cost-per-vehicle for certain automobiles produced in North America could increase by $12,000 at the high end.

The Hill's Tobias Burns has five things to know here.

Welcome to The Hill’s Business & Economy newsletter, I'm Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

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