Trump’s massive import taxes haven’t done much economic damage — yet

By PAUL WISEMAN CHRISTOPHER RUGABER and ANNE D INNOCENZIO Associated Press Business Writers WASHINGTON AP For months American consumers and businesses have been hearing that President Trump s massive import taxes tariffs would drive up prices and hurt the U S market system But the latest economic reports don t match the doom and gloom Inflation indeed eased last month and hiring was solid in April For now the disconnect has businesses and consumers struggling to reconcile what they were communicated to expect what the numbers say and what they are seeing on the ground Trump and his supporters are quick to point out that the arrangement wars of his first term didn t translate into higher overall inflation across the market So is it time to breathe easy Not yet economists say Trump s tariffs are still huge the highest since the Great Depression of the s They re unpredictable The president frequently announces tariffs only to suspend them days later and to conjure up new ones And they are still working their way through the system We had a good jobs statement We had a cool inflation account and that s great noted Ernie Tedeschi director of economics at Yale University s Budget Lab But that should not give us comfort about what next month will be particularly on inflation FILE Trader Daniel Kryger works on the floor of the New York Stock Exchange on May AP Photo Richard Drew File Walmart for example warned its customers last week that prices will be going up for everything from clothing to car seats Prices for certain items like bananas have already increased True the truce with China last Monday dramatically reduced the risks to the U S business sector and U S and global stock markets rallied last week in relief The United States dropped the import tax that Trump angrily imposed on China America s third-biggest source of imports from an eye-watering to Beijing cut its retaliatory tariffs from to Economists at JPMorgan Chase who had forecast last month that the China tariffs made a recession likely don t expect one now Trump s tariffs are the highest since the Great Depression But even with the lower levies on China the Yale Budget Lab published that the cost of Trump s bargain war will be high Climbing prices will reduce the purchasing power of the average household by Shoe prices will rise and clothing The tariffs will shave percentage points off U S economic improvement this year and increase the unemployment rate now a low by nearly percentage points Trump has plastered taxes on imports from almost every country on earth He s also imposed duties on cars aluminum steel and a multitude of imports from Canada and Mexico The Yale Budget Lab estimates that Trump policies will push the average U S tariff rate to highest since and up from around when Trump took office Other economists put his tariff rate at to During Trump s first term the average tariff rose just percentage point despite all the headlines generated by business policies Now according to the budget lab they are rising percentage points And the tariffs have only begun to bite In April the import tax revenues collected by U S Customs and Frontier Protection came to a tariff rate of just a fraction of what s coming Tedeschi declared That s partly because of delays in rolling out the tariffs including technical glitches that prevented customs agents from collecting them for a couple of weeks The full impact has also been delayed because companies beat the clock by bringing in foreign goods before Trump s tariffs took effect Retailers and importers had also largely halted shipments of shoes clothes toys and other items due to new tariffs but various are resuming imports from China Shown are shipping containers at the port of the port of New York New Jersey in Elizabeth N J Monday May AP Photo Matt Rourke Tedeschi who was chief economist at President Joe Biden s Council of Economic Advisers also notes that it just takes time for tariffs to translate into higher prices During Trump s first term his January levies on foreign washing machines didn t yield more expensive appliances until April that year Still a Federal Reserve research this month discovered that duties Trump imposed in and meant higher prices as soon as two months later suggesting consumers could start paying more in June Consumers are less willing to accept higher prices Things have changed from the first time Trump was in the White House when companies essentially passed along the entire cost of his tariffs Now American consumers still scarred by the burst of inflation that followed the COVID- pandemic may be more reluctant to accept higher prices FILE People shop at a party supply store in the Toy District of Los Angeles on April where the majority of items are imported from China AP Photo Jae C Hong File Consumers weren t inflation exhausted in the way that they are now Tedeschi explained Surveys by Federal Reserve banks in Atlanta and Dallas have exposed that the majority companies would eat at least particular of the tariff costs this time around And one reason that the Labor Department s producer price index fell in April was that retailers and wholesalers disclosed lower profit margins a sign that they may have been absorbing specific of the tariff cost Trump who has long insisted that foreign countries and not U S companies or consumers pay his tariffs on Saturday lashed out at Walmart for saying it would raise prices On social media he demanded that the giant retailer EAT THE TARIFFS and do not charge valued customers anything I ll be watching and so will your customers The economic damage doesn t just come from the cost of tariffs but from the erratic way the president imposes them For instance the China tariffs were just suspended for days Likewise Trump has paused high taxes he slapped last month on imports from countries with which the United States runs pact deficits Could those levies come back Consumers are clearly fearful that the duties will boost prices as consumer confidence surveys have plummeted since Trump began ramping up his tariff threats in February The Conference Board s consumer confidence index has fallen for five straight months to its lowest level since the depths of the pandemic in May Costlier coffee and Christmas wreathes are coming Snowy Owl Coffee Roasters in Sandwich Massachusetts which imports beans from Brazil Nicaragua Burundi and other countries is only now planning to raise its prices this week to cover the cost of the tariffs It plans to add cents to cents to the price for each cup Related Articles Colorado is part of lawsuits and counting against Trump Here s what AG Phil Weiser says is behind the strategy Due process dismissed as the refrain of woke liberals Letters DHS asks for National Guard troops for immigration roundups Pentagon reviewing request Supreme Court rejects Trump bid to resume quick deportations of Venezuelans under th century law Trump suspends asylum system leaving immigrants to face an uncertain future Tariffs are increasing costs and they re adding to a lot of uncertainty around the expected for a downturn stated Shayna Ferullo co-owner of Snowy Owl We are looking closely at the year ahead with the goal of consolidating and operating really really tightly Ferullo will also have to pay much more than she budgeted to renovate her shop in Brewster Massachusetts one of her three retail locations because the contractor has raised his estimate partly due to tariffs on building supplies She has already elected to not fill one job after an employee left and is looking at techniques automation could help reduce her labor costs though she hasn t laid off any of her employees Jared Hendricks CEO of Village Lighting Co last month halted shipments of supplies he gets from China holiday storage bags wreathes holiday lights and garlands Now that the U S and China have reached a truce he s trying to get the products to the United States in time for the holidays He estimates that it will take to days from China to the West Coast ports via ship and another days to days for the goods to go through U S Customs then trip via Union Pacific Railways to his company in Utah Given all the expected delays Hendricks explained he s worried that his holiday d cor won t arrive by Sept when it should start appearing in stores Meanwhile he s figuring out how to foot a million bill for the tariffs He s hoping he can cover the cost by raising prices to In the meantime he s trying to secure a loan against his house to pay for the levies We are moving forward he noted but at great cost personal peril and weariness D Innocenzio shared from New York