President Donald Trump’s expanding pricing campaign could turn against American families, with new research from the Budget laboratory of the University of Yale warning that the newly imposed and proposed tasks could sow American households with up to $ 2,400 in additional costs in only 2025.
The analysis, published on Wednesday, painted a table striking the cumulative effects of Trump’s trade policies, which could trigger a peak of significant inflation, slower economic growth, job losses and more strict consumption margins.
If all the prices announced remain in place, the United States will face an effective rate of 18%-the highest seen in almost a century, dating back to the law of 1930 protectionist Smoot-Hawley.
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Prices go up, prices follow
Study factors in new prices on a large strip of imports, including the expected rights of 50% of Trump on copper – a vital component for construction, electronics, vehicles and national defense – as well as new prices targeting Brazil, Japan, South Korea and potentially the pharmaceutical sector.
Already, copper prices jumped 10%, reaching a historic summit just hours after Trump confirmed this decision. Analysts claim that this increases broader inflationary risks in industries depending on copper.
“If this is the case, American companies will pay much more than 10% more to buy copper, increasing the prices of all products that use copper,” said Peter Schiff, chief economist at Euro Pacific Asset Management.
Schiff, a long -standing critic of protectionist trade measures, warned that the prices would ignite a consumer cost crisis.
“As I warned, Trump has just imposed additional prices of 25% on imports from South Korea and Japan … Consumers must prepare for much higher prices and get used to higher interest rates.”
What will become more expensive?
According to Yale’s model, clothes, shoes, electronics, metals, leather items and cars will bring the weight. In the short term, clothing prices should increase by 37%, 39%shoes and 26%electrical equipment. In the long term, prices can stabilize, but not before setting 18% on average.
Even everyday essential elements such as coffee, fruits, vegetables and orange juice – especially those imported from Brazil – should become more expensive. The grocery store can see more moderate increases, but they still aggravate the burden of the cost of living for low -income households.
Loss of GDP, jobs in danger
The price stroke will not only be at the payment counter. Yale projects a 0.7% drop in American GDP in 2025 and a 0.4% increase in unemployment, because companies reduce jobs or delay hiring to manage the cost increase. Damage could also be more permanent: with long -term prices, GDP would remain 0.4% smaller each year, for an annual loss of $ 110 billion.
Sectors such as construction, agriculture, retail and automotive manufacturing should be disproportionately affected. Yale researchers noted a possible increase of 2% in American manufacturing, but they warned that this increase is made at the cost of broader economic stability.
Massive income or massive burden?
On paper, Trump’s commercial strategy could generate $ 2.6 billions of income between 2026 and 2035, with 2.2 billions of dollars of net earnings after taking the losses into account. This projection is what the Trump administration indicates in the defense of prices as a source of vital income and a measure to “level the rules of the game”.
However, economists warn that the windfall is highly regressive, being at the expense of consumers and small businesses. Most income would be collected thanks to higher prices on imports – paid indirectly by the public – not foreign exporters.
Companies are preparing for a blow
A KPMG survey of 300 US US leaders has revealed that 83% expect to increase prices over the next six months, and more than half say that prices have already started to press their beneficiary margins.
“The full impact on consumers is probably still to come,” said Brian Higgins, an advisory partner at KPMG US. “Many companies retain price increases until August 1.”
Despite the radical impact, the full extent of Trump’s pricing program remains uncertain. The president frequently moved positions on trade policy, winning the nickname “Taco Trump” – “Trump always chickens” – delays and inversions.
After the global markets plunged earlier this year after the prices of Trump’s “day of liberation”, the White House was implemented for 90 days. This break expires on August 1, and most prices should now come into play immediately. While some countries – such as China, Vietnam and the United Kingdom – have concluded partial agreements, Trump continues to send letters to foreign governments, saying that rates could still change according to the “relationship with your country”.
In particular, the cost estimate of $ 2,400 of Yale does not take into account the potential responses of the federal reserve, such as interest rate adjustments, which could have an impact on household budgets. If inflation accelerates, the Fed could be forced to increase the rates: loan costs and mortgage payments for millions.
Although the Trump administration insists that the prices are strategic and patriotic, the growing data tell a more sober story.
