After a Lag, Consumers Begin to Feel the Pinch of Tariffs
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How tariffs on EU goods could affect US consumers
The U.S. and the European Union announced a new trade agreement framework over the weekend. It sets a 15% tariff on most goods imported from the EU, as opposed to a previously proposed 30% rate. Some products will be exempt from any tariffs, including aircraft parts, certain chemicals and generic drugs.
It sets a 15% tariff on most goods imported from the EU, as opposed to a previously proposed 30% rate.
The U.S. imported $605 billion worth of goods from the 27-country bloc last year.
Complete details of the agreement have not been made available, but it could have a major impact on the price of goods like European-made cars and pharmaceuticals — which may be passed onto consumers.
RELATED STORY | ‘It’s hurting us’: Small businesses feel the pinch of tariffs
Some products will be exempt from any tariffs, including aircraft parts, certain chemicals and generic drugs, and some agricultural products.
But many businesses are still waiting to learn if the deal will impact them, including the alcohol industry.
“We are greatly hopeful that the 15% tariff is not applied to distilled spirits,” said Chris Swonger, the CEO of the Distilled Spirits Council of the U.S.
He says any tariff would drive prices up.
“Any tax on distilled spirits products or a tariff on distilled spirit products are going to impede on that consumer being able to afford that special bottle of scotch or cognac.”
Trump tariffs live updates: Buffett’s Berkshire portfolio takes tariffs hit; Trump outlines sweeping new tariffs for dozens of trade partners
Berkshire Hathaway’s consumer products group saw a 5.1% year-over-year revenue decline in the second quarter. President Trump outlined tariff rates on dozens of trade partners, taking a step toward further reshaping the US trade landscape. Trump imposed 50% tariffs on semi-finished copper products starting Aug. 1, but he stopped short of applying the duties to copper scrap and input materials, sending copper (HG=F) futures plunging throughout the week. Trump granted Mexico a 90-day reprieve on higher tariffs, saying he would extend the country’s current tariff rates.
Warren Buffett’s Berkshire Hathaway said on Saturday that its consumer goods businesses took a hit from US tariffs, Reuters reported. Its consumer products group, which includes Fruit of the Loom and Brooks Sports, saw a 5.1% year-over-year revenue decline in the second quarter.
Berkshire blamed the tariffs for delays in orders and shipments.
In May, during Berkshire’s annual meeting, Buffett strongly defended free trade. He said tarffs should not be used as a “weapon” adding “balanced trade is good for the world.”
Meanwhile, President Trump outlined tariff rates on dozens of trade partners, taking a step toward further reshaping the US trade landscape.
Trump signed an order to hike tariffs on Canada to 35%, while he kept a baseline minimum rate of 10% across all partners. The tariffs on Canada went into effect Friday, while many of the other “reciprocal” rates take effect Aug. 7.
Global stocks fell Friday as Trump’s imposed tariffs on dozens of countries, advancing his effort to reshape global trade.
Yahoo Finance’s Ben Werschkul has more details on the latest orders here. You can see the new rates Trump is set to levy in the graphic below:
In the past several days, Trump has unleashed a flurry of deals and trade moves leading up to his self-imposed deadline:
Trump granted Mexico, the US’s largest trading partner, a 90-day reprieve on higher tariffs, saying he would extend the country’s current tariff rates to allow for more time for negotiations.
The US agreed to a trade deal South Korea. The agreement includes a 15% tariff rate on imports from the country, while the US will not be charged a tariff on its exports, Trump said.
Trump imposed 50% tariffs on semi-finished copper products starting Aug. 1, but he stopped short of applying the duties to copper scrap and input materials, sending copper (HG=F) futures plunging throughout the week.
The president signed an order to end the de minimis exemption on low-value imports under $800, thereby applying tariffs from Aug. 29.
Trump signed another order to impose a total of 50% tariffs on many goods from Brazil. However, it exempts key US imports like orange juice and aircraft parts that benefit Embraer (ERJ).
The US and EU agreed to a trade deal that imposes 15% tariffs on EU goods. The two sides still need to iron out several key issues.
Read more: What Trump’s tariffs mean for the economy and your wallet
Here are the latest updates as the policy reverberates around the world.
LIVE
1588 updates
Why Trump’s tariffs may hit low-income households hardest
Tariffs are a kind of tax that hit poorer households more than higher earning ones. Ernie Tedeschi, the director of economics at the Budget Lab at Yale, spoke to Morning Edition. He said tariffs are “almost tailor-made” to hit lower income families because the U.S. imports alternatives because they are cheaper. The White House says the cost of tariffs will not be borne by American consumers, but by foreign exporters who rely on access to the American economy. The president has also said he plans to impose a 30% tariff on goods from Mexico and the European Union — the United States’ two largest trading partners. The Labor Department says consumer prices went up 2.7% in June compared to last year, a sign that tariffs may already be affecting prices. The effects of tariffs on consumers are still uncertain,Tedeschi said, and businesses may try to front-run the tariffs so that they don’t hit consumers when they hit. The tariffs have not been this high since the 1930s, he said.
toggle caption Spencer Platt/Getty Images North America
President Trump has argued that his “America First” trade policy is intended to balance what he feels is an unfair global trade scheme that hurts U.S. workers.
As things stand, there’s a 10% tariff on almost everything the U.S. imports, though there are some exceptions. On goods from China, there’s a 30% tariff rate. Last year, China was the third largest source of imported goods to the U.S.
Consumer prices went up 2.7% in June compared to last year, according to the Labor Department — a sign that tariffs may already be affecting prices. Clothing prices rose 0.4% and appliances went up about 2%.
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The president has also said he plans to impose a 30% tariff on goods from Mexico and the European Union — the U.S.’ two largest trading partners.
But some economists warn that it may be some of the most vulnerable people in the U.S. who will feel the economic pinch of tariffs the president has imposed on most of the world.
Ernie Tedeschi, the director of economics at the Budget Lab at Yale — a nonpartisan research policy center that analyzes federal economic policy, spoke to Morning Edition about why low income households are more likely to feel the pinch of tariffs. Tedeschi also served as chief economist at the White House Council of Economic Advisers under Joe Biden
Here’s what he had to say:
Tariffs are a kind of tax that hit poorer households more than higher earning ones
Tedeschi said most U.S. taxes, especially federal taxes, are progressive.
“That means that they pinch higher income families more than they do lower income families,” Tedeschi said. “Our income tax is a great example of that. When we run the numbers on tariffs, we find that that’s the opposite.”
According to the Budget Lab’s analysis of Trump’s tariffs, prices would rise by more than 2%. Tedeschi said that could lead to an almost 4% drop in purchasing power of lower-income families, costing them about $1,500 annually.
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White House spokesperson Kush Desai told NPR that “The Administration has consistently maintained that the cost of tariffs will not be borne by American consumers, but by foreign exporters who rely on access to the American economy, the world’s biggest and best consumer market.”
Desai also pointed to a July analysis from the White House’s Council of Economic Advisers which found that the prices of imported goods have fallen this year, even as tariffs have been in effect.
“President Trump’s agenda of deregulation, tariffs, energy abundance, and tax cuts led to the first decline in wealth inequality in decades during his first term, and this same agenda is going to again unleash a historic economy for working class Americans during his second term,” Desai said.
Households with lower incomes tend to buy more imported, tariff-hit goods
Tedeschi said people change their consumption patterns as they make more income.
“Lower income families not only spend a greater share of their income to begin with than higher income families do, but they spend a greater share of their budget on imports, in particular because imports tend to be lower cost than a lot of domestic alternatives,” Tedeschi said.
He added that the current makeup of Trump’s tariffs are “almost tailor-made” to hit lower income families because the U.S. imports alternatives to U.S.-made goods specifically because they are cheaper.
toggle caption Ronaldo Schemidt/AFP via Getty Images
When U.S. consumers will feel the full tariff pinch is uncertain
Tedeschi said tariffs have not been this high since the 1930s, adding that “we don’t really have a playbook for how tariffs this high percolate into the economy.”
He continued: “What we do know from past experience is that businesses and consumers will try to front-run the tariffs; businesses increase their inventory, and so that can delay the effects when consumers finally hit them.”
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When Trump announced a 90-day pause on the 145% tariff rate he slapped on Chinese goods, many businesses rushed to bring in goods to shore up their inventories and make the most of the standing 30% rate.
But at the end of day, Tedeschi said, “over one or two years, [tariffs] should start flowing through the economy.”
This digital article was edited by Majd Al-Waheidi. The radio version was edited by Arezou Rezvani and produced by Nia Dumas and Kaity Kline.
Trump tariffs live updates: Buffett’s Berkshire portfolio takes tariffs hit; Trump outlines sweeping new tariffs for dozens of trade partners
Berkshire Hathaway’s consumer products group saw a 5.1% year-over-year revenue decline in the second quarter. President Trump outlined tariff rates on dozens of trade partners, taking a step toward further reshaping the US trade landscape. Trump imposed 50% tariffs on semi-finished copper products starting Aug. 1, but he stopped short of applying the duties to copper scrap and input materials, sending copper (HG=F) futures plunging throughout the week. Trump granted Mexico a 90-day reprieve on higher tariffs, saying he would extend the country’s current tariff rates.
Warren Buffett’s Berkshire Hathaway said on Saturday that its consumer goods businesses took a hit from US tariffs, Reuters reported. Its consumer products group, which includes Fruit of the Loom and Brooks Sports, saw a 5.1% year-over-year revenue decline in the second quarter.
Berkshire blamed the tariffs for delays in orders and shipments.
In May, during Berkshire’s annual meeting, Buffett strongly defended free trade. He said tarffs should not be used as a “weapon” adding “balanced trade is good for the world.”
Meanwhile, President Trump outlined tariff rates on dozens of trade partners, taking a step toward further reshaping the US trade landscape.
Trump signed an order to hike tariffs on Canada to 35%, while he kept a baseline minimum rate of 10% across all partners. The tariffs on Canada went into effect Friday, while many of the other “reciprocal” rates take effect Aug. 7.
Global stocks fell Friday as Trump’s imposed tariffs on dozens of countries, advancing his effort to reshape global trade.
Yahoo Finance’s Ben Werschkul has more details on the latest orders here. You can see the new rates Trump is set to levy in the graphic below:
In the past several days, Trump has unleashed a flurry of deals and trade moves leading up to his self-imposed deadline:
Trump granted Mexico, the US’s largest trading partner, a 90-day reprieve on higher tariffs, saying he would extend the country’s current tariff rates to allow for more time for negotiations.
The US agreed to a trade deal South Korea. The agreement includes a 15% tariff rate on imports from the country, while the US will not be charged a tariff on its exports, Trump said.
Trump imposed 50% tariffs on semi-finished copper products starting Aug. 1, but he stopped short of applying the duties to copper scrap and input materials, sending copper (HG=F) futures plunging throughout the week.
The president signed an order to end the de minimis exemption on low-value imports under $800, thereby applying tariffs from Aug. 29.
Trump signed another order to impose a total of 50% tariffs on many goods from Brazil. However, it exempts key US imports like orange juice and aircraft parts that benefit Embraer (ERJ).
The US and EU agreed to a trade deal that imposes 15% tariffs on EU goods. The two sides still need to iron out several key issues.
Read more: What Trump’s tariffs mean for the economy and your wallet
Here are the latest updates as the policy reverberates around the world.
LIVE
1588 updates
Why Trump’s tariffs may hit low-income households hardest
Tariffs are a kind of tax that hit poorer households more than higher earning ones, an economist says. Ernie Tedeschi, the director of economics at the Budget Lab at Yale, spoke to Morning Edition about why low income households are more likely to feel the pinch of tariffs. Consumer prices went up 2.7% in June compared to last year, according to the Labor Department — a sign that tariffs may already be affecting prices. White House spokesperson: “The Administration has consistently maintained that the cost of tariffs will not be borne by American consumers, but by foreign exporters who rely on access to the U.S.’s biggest and best consumer market” The White House’s Council of Economic Advisers found that the prices of imported goods have fallen this year, even as tariffs have been in effect, the White House said in a July analysis. The president’s agenda of deregulation, tariffs, energy abundance, and tax cuts led to the first decline in wealth inequality in decades during his first term, a spokesperson said.
President Trump has argued that his “America First” trade policy is intended to balance what he feels is an unfair global trade scheme that hurts U.S. workers.
As things stand, there’s a 10% tariff on almost everything the U.S. imports, though there are some exceptions. On goods from China, there’s a 30% tariff rate. Last year, China was the third largest source of imported goods to the U.S.
Consumer prices went up 2.7% in June compared to last year, according to the Labor Department — a sign that tariffs may already be affecting prices. Clothing prices rose 0.4% and appliances went up about 2%.
The president has also said he plans to impose a 30% tariff on goods from Mexico and the European Union — the U.S.’ two largest trading partners.
But some economists warn that it may be some of the most vulnerable people in the U.S. who will feel the economic pinch of tariffs the president has imposed on most of the world.
Ernie Tedeschi, the director of economics at the Budget Lab at Yale — a nonpartisan research policy center that analyzes federal economic policy, spoke to Morning Edition about why low income households are more likely to feel the pinch of tariffs. Tedeschi also served as chief economist at the White House Council of Economic Advisers under Joe Biden
Here’s what he had to say:
Tariffs are a kind of tax that hit poorer households more than higher earning ones
Tedeschi said most U.S. taxes, especially federal taxes, are progressive.
“That means that they pinch higher income families more than they do lower income families,” Tedeschi said. “Our income tax is a great example of that. When we run the numbers on tariffs, we find that that’s the opposite.”
According to the Budget Lab’s analysis of Trump’s tariffs, prices would rise by more than 2%. Tedeschi said that could lead to an almost 4% drop in purchasing power of lower-income families, costing them about $1,500 annually.
White House spokesperson Kush Desai told NPR that “The Administration has consistently maintained that the cost of tariffs will not be borne by American consumers, but by foreign exporters who rely on access to the American economy, the world’s biggest and best consumer market.”
Desai also pointed to a July analysis from the White House’s Council of Economic Advisers which found that the prices of imported goods have fallen this year, even as tariffs have been in effect.
“President Trump’s agenda of deregulation, tariffs, energy abundance, and tax cuts led to the first decline in wealth inequality in decades during his first term, and this same agenda is going to again unleash a historic economy for working class Americans during his second term,” Desai said.
Households with lower incomes tend to buy more imported, tariff-hit goods
Tedeschi said people change their consumption patterns as they make more income.
“Lower income families not only spend a greater share of their income to begin with than higher income families do, but they spend a greater share of their budget on imports, in particular because imports tend to be lower cost than a lot of domestic alternatives,” Tedeschi said.
He added that the current makeup of Trump’s tariffs are “almost tailor-made” to hit lower income families because the U.S. imports alternatives to U.S.-made goods specifically because they are cheaper.
Ronaldo Schemidt / AFP via Getty Images / AFP via Getty Images Fruit and vegetables are seen at a Walmart supermarket in Houston on May 15.
When U.S. consumers will feel the full tariff pinch is uncertain
Tedeschi said tariffs have not been this high since the 1930s, adding that “we don’t really have a playbook for how tariffs this high percolate into the economy.”
He continued: “What we do know from past experience is that businesses and consumers will try to front-run the tariffs; businesses increase their inventory, and so that can delay the effects when consumers finally hit them.”
When Trump announced a 90-day pause on the 145% tariff rate he slapped on Chinese goods, many businesses rushed to bring in goods to shore up their inventories and make the most of the standing 30% rate.
But at the end of day, Tedeschi said, “over one or two years, [tariffs] should start flowing through the economy.”
This digital article was edited by Majd Al-Waheidi. The radio version was edited by Arezou Rezvani and produced by Nia Dumas and Kaity Kline.
Copyright 2025 NPR
Source: https://www.nytimes.com/2025/08/02/business/trump-tariffs-consumer-prices.html