When Amisha Harding heard recently President Donald Trump was imposing tariffs on China, Mexico and Canada, she placed an Instacart order for water, canned tuna and other basic staples to ensure she had enough food if anything were to go haywire.
Harding, a nonprofit professional living in Snellville, isn’t just feeding herself. She’s taking care of her aunt, who last year was diagnosed with blood cancer and is recovering from heart surgery.
Over the past few years, Harding observed prices skyrocket at her grocery store. A bag of fresh spinach used to be $4.99. Now, it’s as high as $8.99, she said.
“It takes a toll on you,” Harding said.
“In addition to navigating chemo appointments and cardiology visits, making sure she’s OK day-to-day and keeping her encouraged, I have to worry about the very basics of making sure she can eat in the midst of everything going on,” she said of her aunt.
Credit: AP
Credit: AP
Trump put on pause 25% tariffs on goods from Mexico and Canada, but he went forward with 10% levies on Chinese imports. He has also threatened to enact tariffs on goods from the European Union.
On Monday, Trump instituted 25% tariffs on foreign aluminum and steel.
Tariffs are taxes on imported goods. Those taxes typically are passed along by businesses to the buyers of products, whether the buyers are manufacturers obtaining parts that go into other things or a consumer shopping at a store or online.
For many Americans, the protectionist stance on trade is throwing more uncertainty into an economy where paychecks already weren’t going far enough.
Economists call tariffs a type of consumption tax, functioning similarly to sales taxes, and generally view them as inflationary.
The most recent Atlanta Journal-Constitution poll, which sought voter sentiment before Trump’s inauguration on Jan. 20, found 49% of respondents are somewhat or strongly opposed to Trump’s proposed tariffs, compared to 42% who strongly or somewhat support Trump’s plans. About two-thirds of respondents said they thought Trump’s promised tariffs would increase prices.
There are a number of estimates on the cost of the tariffs to the American consumer. An analysis by the nonpartisan Tax Foundation found each household would see an average tax increase of more than $800 in 2025 if the tariffs on Canada, China and Mexico were to go into effect. The nonpartisan Peterson Institute for International Economics estimates the cost to each median household will be more than $1,200 per year.
Those analyses do not include the threatened tariffs on steel and aluminum, which will increase the costs of new cars, construction and other things made with the metals.
But high prices are the point of tariffs, said Kimberly Clausing, an economist and senior fellow at the Peterson Institute.
Will tariffs boost jobs?
Trump has argued tariffs will increase domestic manufacturing and create jobs.
Tariffs are supposed to increase prices not just of imported goods, but domestic ones as well, to entice American companies to produce more of that good at home because they can make more money. That’s how domestic production is boosted.
“That higher price is what gets them to make more supply,” Clausing explained.
Even the president acknowledges the trade penalties could be painful.
“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump wrote in a Feb. 2 social media post. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
The question is who will bear the brunt of that cost?
Economists say lower income Americans are most impacted because “if you’re a lower income household, you’re probably spending all of your income,” said Erica York, vice president of federal tax policy at the Tax Foundation.
For those households, there isn’t enough left after paying for basic necessities to put into savings, York explained, so “if the tax is just hitting consumption and you’re consuming more of your income, you’re bearing a larger burden of that.”
Tariffs are not a new Trump policy, he hit many Chinese goods with import taxes during his first stint in the White House.
Gary Huskins, a truck driver from Senoia, doesn’t remember the tariffs enacted during Trump’s first term impacting his day-to-day, so he’s not too concerned about the new round.
“I think if it come right down to it, I would rather buy American anyway,” Huskins said. “If there’s choices out there, I would rather buy the American.”
But Trump’s round of tariffs in 2018 and 2019, which Biden continued during his term, did have a negative effect on consumers. They decreased full-time equivalent employment by 142,000 jobs, according to York’s analysis.
She estimates the administration’s new tariffs on Canada, Mexico and China, if fully implemented and kept in place permanently, would decrease employment by the equivalent of 330,000 jobs.
Credit: AP
Credit: AP
However, the 2018 tariffs did decrease imports from China, though that didn’t necessarily decrease how much the U.S. imported overall, York said. Instead, the country started bringing in more goods from other parts of Asia, Canada, Mexico and others.
“We just changed who we were importing from to avoid paying some of those import taxes,” York explained.
‘Cost effective?’
The newest round of tariffs also may not boost domestic manufacturing but, in fact, depress it because many raw materials still have to be imported into the country, experts say.
That’s the case for Siva Kandaswamy, founder and CEO of Atlanta-based corporate apparel company Spark Polo. Kandaswamy said he was considering moving production to the U.S. from Vietnam, where his products are currently made, but is now hesitant because of the tariffs in addition to the higher cost of labor in the U.S.
“My question is … we are dependent on various other things that need to be imported from overseas, so will it be cost-effective?” he said.
But some local small business owners see an opportunity with the Trump administration’s latest tariffs — if federal and state governments are intentional about supporting local entrepreneurs.
Tia Robinson started her own athletic clothing line, Vertical Activewear, at the end of 2019. When months later the pandemic disrupted supply chains, she decided to move manufacturing in-house and now makes clothes for her own brand as well as other brands from a facility in Duluth.
Credit: Handout
Credit: Handout
In the past two weeks, she said she has seen a 40% increase in the inquiries she’s receiving from potential clients. Her shop, though, is “small but mighty.”
She is hoping Georgia leaders can support the hiring and training needs manufacturers like her would face to handle all the inquiries.
“Georgia used to be one of those places that was the capital when it comes to textiles and textile manufacturing. So we’ve lost a few generations in terms of that subject matter expertise,” Robinson said.
It’s unclear whether Trump will continue the tariffs on China, end up imposing penalties on Canada and Mexico or decide to target other countries. Trump told the BBC last week he would impose tariffs on goods from the European Union “pretty soon.”
But everyone agrees: A price will be paid for these tariffs. The question is who will benefit and who will be harmed.
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