American shoppers could end up feeling another price hike in the coming months, even as US wholesalers are already beginning to feel the squeeze of Donald Trump’s tariff-based trade agenda.
The Republicans’ message in response? Embrace the pain.
The president’s sit-down with NBC’s Kristen Welker over the weekend solidified the Trump 2.0 trade policy, as haphazardly laid out by the White House over the past several months: Trump plans to not merely force US trading partners to renegotiate agreements and cease their supposed campaigns to “rip off” American businesses; he hopes to reshore manufacturing and production facilities in the US en masse.
In a combative interview, Trump made clear that he plans to keep at least some of his tariffs on US imports intact through the remainder of his term. Failing to do so, he said, would undermine any effort to encourage businesses to onshore production in the US.
“You’re not taking the possibility that these tariffs could be permanent off the table — some of them?” asked Welker.
“No, I wouldn’t do that,” Trump responded. “Because if somebody thought they were going to come off the table, why would they build in the United States?”
The stark admission by the president that consumers will see rising costs for toys and other items is putting his loyal Republican defenders in a tight spot.
Some were out over the weekend running a new script: Americans, they say, are ready to embrace collective sacrifice in order to fulfill the president’s long-term agenda.
“The idea that the Christmas trade is already starting to slow down and there might be less around, I get it. I think the American people will understand that because the American people understand shared sacrifice,” Rep. David Joyce, an Ohio Republican, told CNN on Sunday.
Mary Miller, a Republican representative from Illinois, was giving her own brand of tough love: “John Deere better get their business back to the country or they can plan on losing their business. There are other places to buy equipment.”
On Monday, markets were back in the red. The Dow remains above 41,000, but last week’s rally has stalled.
The president would go on to quibble with the interviewer over his comment last week about Americans’ holiday shopping, made during a Cabinet meeting: “Well, maybe the children will have two dolls instead of 30 dolls. So maybe the two dolls will cost a couple bucks more than they would normally.”
On Monday, he went further, announcing that the US would charge “a 100% tariff on movies made outside the US” in a Truth Social posting, then later at the White House.
John M. Veitch, dean of the School of Business and Management at Notre Dame de Namur University, told The Independent on Monday that even if a recession was averted, the costs for consumers this year were likely baked in.
It’s “too late” to stop price hikes for consumer goods this holiday season, Veitch said: “Most orders to China for toys go out between February and end of April. With 4-5 month production time plus trans-Pacific shipping times it’s pretty much too late. Plus even if Trump says he’ll reverse tariffs who will believe him, trust that any policy will remain in place and enter into new supplier contracts? “
“[I]t’s as much the uncertainty generated by how the tariffs were rolled out, and the various “adjustments” afterwards, as much as the tariffs themselves that have impacted trade,” said Veitch. “Uncertainty is just bad for business generally. The main contribution of most of the current administration’s economic policies has been to inject more uncertainty into business.”
The intent of the president to leave some of his tariff actions in place long-term and even the continuance of his soaring “reciprocal” tariffs in the near future has already caused a drop in global trade volume and a disruption in US imports from Asia, especially China. There’s no consensus yet on how much stress the policies will put on the global supply chain, which strengthened after the Covid pandemic began in 2020.
Some sectors of the economy, like semiconductors, are likely to be hit worse than others. Already, companies like Microsoft, Apple and Nintendo are taking steps to respond to tariffs that are set to hit electronic goods including video game consoles, computers and phones and cause major price hikes ahead of the holiday shopping season later this year. In Europe, meanwhile, governments are bracing for the potential return of “reciprocal” tariffs with the European Union this summer — and tens of thousands have reportedly begun organizing boycotts of American goods.
“Assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900m to our costs,” Apple CEO Tim Cook said on a quarterly earnings call last week, according to CNN.
Not everyone in his party is pleased. A coalition of Republicans in both chambers of Congress are supporting a measure that would force the president to go through Congress for approval on new tariff announcements. The bill would undo decades of delegation of Congress’s defined tariff powers in the Constitution to the Executive Branch, which began in the 1930s. The legislation as of yet falls far short of the veto-proof majority it would need to make it into law.
“Well, the [agriculture] community is very worried. If you talk to the Farm Bureau, the cattlemen … some of our biggest meat producers here are for beef, they’re already getting their markets shut off,” Rep. Don Bacon, a Nebraska Republican, said on NewsNation’s The Hill Sunday this weekend.
“We’re already seeing an impact on our exports in Nebraska, where we’ve lost market access in Europe primarily … particularly with our beef and popcorn and things like that,” he continued. “So, we are going into a recession in the Midwest farm community.”
Stock markets plunged several times over the course of Trump’s first 100 days in office, each time triggered by the president’s comments or announcements. Markets have now made up most of those losses, but the president’s power to cause further damage remains apparent.
Even with recession fears on the rise, some investors are still looking to Trump’s administration with cautious optimism. An analysis from Raymond James chief investment officer Larry Adam read in part last week: “Despite tariff-related headlines and a slowdown in economic momentum (with an expected ~1% GDP growth in 2025), we believe a recession will be narrowly avoided.”
The analysis went on to say that much of the US’s ability to avoid recession hinged on market confidence being restored by Republicans in Congress succeeding in the bid to pass a budget plan which would include a key win for Wall Street — the extension of the 2017 GOP tax cuts.
“Timing is crucial, as progress could provide a much-needed confidence boost and prevent a self-fulfilling recession,” Adam wrote.
