Trump Tariffs To Cost Consumers $1.2 Trillion In 2025

Remember all the whining and wailing from those on the political right both in media reports and social media posts about inflation and rising prices in the lead up to the 2024 presidential election?  Remember too how the Felon promised to lower prices on day one of his second regime?  Nine months in and the Felon has not delivered on his promise to lower prices and, worse yet, prices have only increased driven in part by the Felon's arbitrary tariff and trade war polices and retaliation.  Indeed, this week it was reported that the average new car cost will now be $50,000.00 or more (more than I paid for my first house in 1979) with no relief in sight.  Meanwhile, American manufacturing jobs have declined, not increased as promised by the Felon, and the agriculture industry has been devastated by lost markets in China and the Felon's cruel deportation policies adversely impacting agricultural laborers. Canada is now importing more cars directly from Mexico than from the USA and international tourism to the USA has plummeted. Had Joe Biden or some other Democrat done such economic damage the MAGA base would be apoplectic, yet much of MAGA world is silent, seeming willing to be savaged economically in exchange for the Felon's blatantly racist policies and efforts to restore unbridled white supremacy. A piece at CNBC looks at the tariff costs borne by American consumers in 2025: 

President Donald Trump’s tariffs will cost global businesses upward of $1.2 trillion in 2025, with most of the cost being passed onto consumers, according to a new analysis from S&P Global.

In a white paper released Thursday, the firm said its estimate of additional expenses for companies is probably conservative. The price tag comes from information provided by some 15,000 sell-side analysts across 9,000 companies who contribute to S&P and its proprietary research indexes.

“The sources of this trillion-dollar squeeze are broad. Tariffs and trade barriers act as taxes on supply chains and divert cash to governments; logistics delays and freight costs compound the effect,” author Daniel Sandberg said in the report. “Collectively, these forces represent a systemic transfer of wealth from corporate profits to workers, suppliers, governments, and infrastructure investors.”

Trump in April slapped 10% tariffs on all goods entering the U.S. and listed individual “reciprocal” tariffs for dozens of other countries. Since then, the White House has entered a series of negotiations and agreements while also adding duties on a variety of individual items such as kitchen cabinets, autos and timber.

[T]he S&P analysis . . . . says that just one-third will be borne by companies, with the rest falling on the shoulders of consumers, under conservative estimates. The figures incorporated a $907 billion hit to covered companies with the remainder to uncovered firms as well as private equity and venture capital.

“With real output declining, consumers are paying more for less, suggesting that this two-thirds share represents a lower bound on their true burden,” said Sandberg, who wrote the report along with Drew Bowers, a senior quantitative analyst at S&P Global.

The size of the tariff hit and the burden of the costs are critical both for the White House looking to sell the duties as essential to restoring a fair trade balance, and to policymakers at the Federal Reserve looking to calibrate the proper balance for monetary policy.

The consensus looks for a 64 basis point contraction in profit margins this year, fading to 28 basis points for 2026 and then 8 to 10 basis points in 2027-28. A basis point equals 0.01%.

“In effect, 2025 locked in the hit; 2026 and 2027 will test whether the market’s optimism about re-equilibration is warranted,” the authors wrote. “For now, consensus envisions a world where margins eventually recover to pre-tariff trajectories. Whether that faith proves justified will depend on how firms adapt through technology, cost discipline and reshaped global value chains that have defined this cycle.”

The impact also likely will depend on how Trump’s tariff strategy evolves. The White House currently is back in heightened tensions with China over a rare earth dispute and Trump’s intentions to retaliate.

The S&P paper found that Trump’s removal in May of the “de minimis” exception for goods under $800 was “the real inflection point” for how hard tariffs would bite. The exception had allowed low-priced goods to sail under previous tariff barriers, but “had become politically untenable.”

“When the exemption closed, the shock rippled through shipping data, earnings reports, and executive commentary,” Sandberg said.

So much "winning"!