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Tariffs and you: What products will cost more, when prices will rise, and what to buy now

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Tariffs and you: What products will cost more, when prices will rise, and what to buy now

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As every American consumer must know by now, President-elect Donald Trump has vowed to impose import tariffs on products entering the United States from Mexico, Canada and China, starting on his first day in office. 

A tariff is a tax, and most economists believe consumers will eventually foot at least part of the bill. 

In a recent University of Chicago survey, more than 90% of economists agreed with the statement that consumers bear “a substantial portion” of import tariffs. 

Naturally, consumers have questions: What products will cost more? When will prices rise? Should I rush out and buy stuff now? 

Here are some answers. 

What products will cost more? 

Import tariffs on China, Mexico and Canada could raise prices for American consumers on a dizzying array of products, according to economists and retailers.  

Which ones? If you are sitting with pen and paper, hoping to make a list, don’t bother. 

“It would be a very long list,” said Robert Handfield, professor of supply chain management at North Carolina State University.  

“Apparel and footwear is almost all produced in China and Mexico. Computers and electronics are also produced in China and Mexico,” he said. “Almost all the toys that people buy for Christmas are produced in China.” 

The National Retail Federation identified more than 500 items of clothing alone whose prices could rise because of tariffs. 

USA TODAY has a written about dozens of potentially tariff-impacted food items.  

But some consumer goods are more likely than others to face tariffs, said James Knightley, chief international economist at ING.  

Knightley predicts the Trump administration will focus its trade negotiations on high-value and high-tech items such as automobiles, large appliances and computer chips. Those products, he said, are associated with higher-wage jobs or national security concerns. 

Not all economists agree, however, that a new round of tariffs will inevitably raise consumer prices.  

“The data doesn’t support that,” said Jeffrey Roach, chief economist at LPL Financial.  

Roach notes that Trump enacted tariffs in his first term as president. In those years, the annual inflation rate peaked at a modest 2.9%. 

When will prices rise? 

Gradually, then suddenly.  

That’s a quote from “The Sun Also Rises,” the Ernest Hemingway classic. Tim Quinlan, senior economist at Wells Fargo, believes it applies here.  

Mere talk of tariffs will spur some consumers to run out and buy big-ticket items, or stockpile smaller ones, on the theory that prices will soon rise. That behavior, alone, could make prices increase.  

If Trump announces tariffs on his first day in office, as he has suggested, some prices could spike immediately. 

“Prices at the pump would go up right away,” Handfield said. Tariffs on Canada would raise the price of Canadian oil. The oil market would adjust quickly, the economist said. 

Car prices, too, could react swiftly to Trump tariffs. Many American vehicles and parts come from Mexico. 

“The minute those tariffs are put into place, you would probably see car dealers raise their prices,” Handfield said.  

Tariffs on other goods might not affect prices for many months.  

Consider steel and aluminum. If Trump wanted new tariffs on those products, the Commerce Department would open an investigation, which could take up to 270 days, according to a Wells Fargo analysis. After that, the president has 90 days to analyze the findings and 15 days to implement the policy.  

When Trump enacted tariffs on steel and aluminum and other items in his first term, “implementation took several months,” Quinlan said.  

Even after new tariffs take effect, they wouldn’t apply to items already sitting in American warehouses. Retailers could spend months selling off that inventory.  

They could try to raise prices on those goods, Knightley said, but “consumer groups will be watching for price-gouging.” 

Should I rush out and buy stuff now? 

If you want to drive to Walmart and fill your trunk with toothpaste and soap, no one is going to stop you.  

But trade experts say it’s not realistic to think American consumers can stock up now on every product that might become more expensive next year because of tariffs. 

“As a general rule, it’s just not practical,” Quinlan said. 

And some items, such as perishable foods, don’t really lend themselves to hoarding. 

“How many peppers and avocadoes can I inventory in my refrigerator?” Quinlan asked. 

Even so, the answer to this question is not a hard “No.” 

Maybe you need a new car. Maybe the car you have now is on its last legs. Cars are expensive. Tariffs could drive up prices.  

“So, if you’re thinking of buying a car or leasing a car, it would probably be a good idea to do that before January,” Handfield said.

The same rule might apply to pricey consumer goods such as washers and dryers, refrigerators and air conditioners, many of them made in Mexico.  

“If you’re in the market for a washing machine anyway, why not buy it now?” Knightley said. “Get the Black Friday discount on top.” 

Loading up on consumer items before Trump enacts tariffs presumes, of course, that tariffs will cause prices to rise. Roach, among others, doesn’t believe that will happen.

What should consumers buy now? “I would say, nothing.”

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