Economists and businesses continue to sound the alarm about price increases as a result of the Trump administration’s sweeping tariffs, but the White House is confident additional costs won’t be shouldered by American consumers.
“The Administration has consistently maintained that the cost of tariffs will be paid by foreign exporters who rely on access to the American economy, the world’s best and biggest consumer market,” White House spokesperson Kush Desai said in a statement.
Imports to the United States are currently being subject to historically high tariffs, according to The Budget Lab at Yale, with the overall average effective tariff rate the highest it’s been since 1933.
“Despite the doom-and-gloom predictions of inflation and recession, it’s been four months since Liberation Day and inflation is trending towards an annualized rate not seen since President Trump’s first term, while a recent CEA analysis found that prices of imported goods are actually declining,” Desai continued.
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President Donald Trump first imposed — and then rescinded — widespread tariffs on “Liberation Day” in April. At the time, economists, banks and businesses all warned of a recession, empty shelves and high prices. Markets have reacted negatively to tariffs in the short term, but a major sticker shock hasn’t come yet.
Devashish Mitra, a professor of economics and Syracuse University, told NOTUS this is because Trump’s tariffs were paused and there was reason to expect price increases when they return.
“People keep talking about, ‘Oh, we haven’t had any inflation,’ but this is because we haven’t had high tariffs because the high tariffs are paused,” he said.
Mitra also noted that in anticipation of steep import taxes, American importers stocked up, particularly on items that would be subject to tariffs beyond the reciprocal tariff rate like copper. This can delay price increases.
Chuck DeVore, a proponent of the president’s tariff policy and the chief national initiatives officer at the Texas Public Policy Foundation, argued that static models predicting price increases and a recession don’t account for how consumers and companies might adjust themselves to the president’s approach.
“Americans may decide to purchase locally manufactured goods. Yeah, they may be a little more expensive; maybe they’re of higher quality. That will result in more profit, more investment in America, that could, over time, result in more goods made in America,” he told NOTUS. “The foreign entity that is selling the product into the U.S. may decide: We’re going to change our plans — we are going to expand our manufacturing capacity in America, and that way we avoid the tariff, right?”
The Trump administration is counting on both foreign and domestic entities bringing their manufacturing to the United States. Some economists have suggested that while tariffs are high, they’re not high enough to prompt manufacturers to move their operations to the U.S..
The White House disputed this idea, pointing to investment commitments being made by companies like Apple.
The Trump trade war has widened to include about 90 countries, and the administration has offered no sign it will let up.
“BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA,” Trump said, upon announcement of the tariffs Wednesday night. “THE ONLY THING THAT CAN STOP AMERICA’S GREATNESS WOULD BE A RADICAL LEFT COURT THAT WANTS TO SEE OUR COUNTRY FAIL!”
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