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Trump’s Threatened Tariffs Could Spike Cost of Living

Trump’s Threatened Tariffs Could Spike Cost of Living

By The South Asia Times

 

WASHINGTON - The US President-elect Donald Trump’s renewed push for tariffs on imported goods has reignited fears of economic disruption, with experts warning of potential spikes in the cost of living. The proposal, part of Trump’s broader vision to "protect American jobs," could impose significant levies on goods from China, Europe, and other trading partners.

If implemented, these tariffs would likely drive up prices for consumer staples such as electronics, clothing, and food items, adding to the burden of American households already grappling with inflation. Economists caution that the ripple effects could further complicate the Federal Reserve’s delicate efforts to stabilize the economy.

The Economic Impact

Tariffs typically increase costs for importers, who often pass these costs onto consumers. Analysts predict that broad-based tariffs could act as a de facto tax on American families, reducing their purchasing power. Retailers and manufacturers reliant on global supply chains might also struggle to adapt, potentially triggering job losses or reduced investments.

“The timing couldn’t be worse,” said Sarah Collins, an economist with the Center for Economic Research. “With inflation already a concern, adding tariffs risks pushing up prices and stalling economic growth.”

The Fed’s Dilemma

The Federal Reserve, which has been closely monitoring inflation, could face a tougher road ahead. Higher consumer prices driven by tariffs might force the Fed to maintain or even increase interest rates for longer than anticipated, further tightening credit conditions.

Chair Jerome Powell has previously emphasized the Fed’s goal of achieving a "soft landing," balancing inflation control without tipping the economy into a recession. However, Trump’s tariff plans could disrupt this balance, forcing policymakers to revise their strategies.

Political Calculations

Trump’s tariff rhetoric also carries political implications, appealing to his voter base in key manufacturing states. While the proposal garners support among some who view it as a way to protect American industry, critics argue that it risks exacerbating economic inequities and alienating international allies.

The Biden administration has yet to respond in detail to the renewed tariff threats but may face pressure to take a strong stance in defense of free trade policies.

The looming uncertainty over tariffs adds another layer of complexity to an already fragile economic landscape. Businesses are bracing for potential disruptions, while consumers prepare for possible increases in everyday expenses.

For now, the path forward depends on whether Trump’s proposals gain traction and how policymakers, both domestic and international, respond. One thing remains clear: the economic and political implications of this move could reverberate far beyond the U.S. border.

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