 "US President Donald Trump called his tariff policy \"one of the most important days... in American history; it's our Declaration of Economic Independence.\" Image Courtesy: @WhiteHouse/X")
The average American household will spend an additional $2,100 per year for goods due to the new tariffs announced by President Donald Trump on Wednesday.
According to a CNN report, citing the nonpartisan Tax Foundation, Trump’s plan will result in a substantial $900 billion drop in US imports.
This decline is expected as consumers either opt for American-made products or simply choose not to buy certain items that will become too expensive, added the report.
Nevertheless, Americans won’t be able to avoid paying more as a result of tariffs.
According to the CNN report, the average import tax in the US is set to jump to 19% this year, up from 2.5% last year — the highest rate since the Smoot-Hawley era in 1933.
Fitch Ratings predicts that this rate could rise even further, pushing America’s effective tariff rate to its highest level in over a century.
As a result, after-tax incomes for Americans will decrease by an average of 2.1% this year, added the report, citing the Tax Foundation estimates.
While no one will be immune to the effects of the tariffs, wealthier Americans are expected to experience a smaller decline in their incomes, according to the report.
Mainstream economists largely agree that the US and global economies will enter a recession this year unless Trump moderates his trade policy. The Trump administration has contested these forecasts, arguing that his trade actions during his first term were expected to lead to soaring inflation and economic slowdown — outcomes that did not materialise.
Impact Shorts
More ShortsDuring his first term, Trump implemented tariffs on $380 billion worth of goods. Now, he has announced tariffs on over $2.5 trillion in imports and has indicated that additional tariffs are forthcoming.
With inputs from agencies