U.S. president Donald Trump announced that he would impose reciprocal tariffs on the nation’s trading partners on 13 February, prompting numerous trade experts to predict higher prices for American consumers.
Shortly after Trump announced the measures, Capital Economics, a global financial analytics firm, told the New York Times that it “predicts that the effective tariff rate on all U.S. imports could rise from less than 3 percent now to around 20 percent.” The effective tariff rate is the percentage of the price of imported goods that goes toward paying tariffs.
The firm said it expects that a dramatic increase in the effective tariff rate would add “roughly 2 percent to consumer prices, meaning that inflation would temporarily rebound to 4 percent later this year.”
Another trade expert who spoke to the Times, Cornell professor Eswar Prasad, called the proposals “a declaration of an all-out trade war against practically all major U.S. trading partners.”
Asked by a member of the press pool whether prices would go up after signing the order, Trump said “not necessarily.”
Though he acknowledged that price increases were possible in the short term, he said that reciprocal tariffs would ultimately force manufacturers to avoid costly tariffs by building plants in the U.S., creating jobs in the process. Howard Lutnick, Trump’s commerce secretary nominee, said that the new tariffs could be implemented by ...
