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Trump threats of steep tariffs on key trading partners could hurt everyday Americans

ROB SCHMITZ, HOST:

So let's dig a little deeper into the potential impact on consumers from what President-elect Trump has proposed. Rob Handfield is at North Carolina State University, where he's executive director of the school's Supply Chain Resource Cooperative. Good morning, Rob.

ROB HANDFIELD: Good morning. How are you?

SCHMITZ: So, Rob, let's assume that Trump follows through on this threat of 25% tariffs on goods from Canada and Mexico, and then he adds another 10% on imports from China. How would these tariffs be felt by American shoppers, and what products would suddenly be more expensive?

HANDFIELD: Well, several sectors would be immediately impacted. First of all, the motor vehicle sector is disproportionately affected. There are over $200 billion in imported motor vehicles. Those imports would now cost 250 billion, which means those dealers certainly can't absorb those higher costs, and this will cause immediate inflation in motor vehicle prices.

The second element, of course, would be at the pump. You know, 52% of the price of gasoline is due to crude oil. So we would see up to 37% increase in gas prices for all gasoline made from crude oil. As far as China, you know, just about everything is produced in China. You know, toys, manufactured goods, electronics, like computers. So pretty much everything would go up, and what we would see effectively would be inflation because producers certainly can't absorb those costs.

SCHMITZ: Wow, 37% increase on gas. I think that is enough to turn many heads in America. You know, is this - is it possible to put a dollar figure on what this would mean for the average American household in terms of extra costs?

HANDFIELD: Yeah. The average American family spends around $6,400 per month. So assuming that they spend this on gas, motor vehicle parts, apparel, they could see their costs go up by 1,200 to $1,500 a month or...

SCHMITZ: Wow.

HANDFIELD: ...Conversely, that they're not able to buy the things they usually want to buy.

SCHMITZ: In addition to the automotive industry, which you mentioned, I'm wondering what other sectors could be hit hard. You know, and I'm thinking about things in the housing market, you know, timber maybe from Canada, aluminum, other building materials.

HANDFIELD: Absolutely. You know, a lot of lumber comes from Canada. They've got a lot of forests up there, and lumber is a direct input into housing. Other things are appliances - refrigerators, stoves, washing machines. Most of those are made in Mexico. So we would see certainly housing prices go up, and as oil goes up, that means transportation goes up. So even food prices would go up because we would be paying more for diesel that powers a lot of these vehicles.

SCHMITZ: So, you know, tariffs have a way of transforming global supply chains - factories in affected countries sometimes go bust, companies move factories to other countries. It sometimes takes time to rebuild these supply routes. Do you foresee disruptions in the global supply chain?

HANDFIELD: Absolutely. China could issue retaliatory tariffs, and that would also impact U.S. exports to China, especially soybeans, poultry, electrical equipment and others. So, yeah, there could be disruptions as well.

SCHMITZ: That is Rob Handfield at North Carolina State's Pool College of Management. Thanks, Rob.

HANDFIELD: Thank you. Pleasure to be here.

(SOUNDBITE OF OFFTHEWALLY'S "BOWER") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Rob Schmitz is NPR's international correspondent based in Berlin, where he covers the human stories of a vast region reckoning with its past while it tries to guide the world toward a brighter future. From his base in the heart of Europe, Schmitz has covered Germany's levelheaded management of the COVID-19 pandemic, the rise of right-wing nationalist politics in Poland and creeping Chinese government influence inside the Czech Republic.