Impact of New Tariffs on Consumer Goods
President Donald Trump’s new global tariffs, ranging from 10 to 50 percent, have taken effect and are causing concern among consumers, businesses, and investors. These tariffs are expected to lead to higher prices for a wide range of everyday items, including coffee, Toyota vehicles, home furnishings, and Gap jeans. While the president has encouraged companies to absorb the increased costs, many are finding it difficult to do so indefinitely.
Luxury items such as Range Rovers, French wines, and Rolex watches are also likely to see price increases due to the new tariff rates. The intention behind these tariffs is to encourage domestic production and purchasing, but economists believe that American consumers will ultimately bear the brunt of the costs. Experts warn that widespread tariffs could result in supply chain disruptions, price surges, or even inflation.
Alcohol: A Major Sector Affected
One of the most affected sectors is alcohol. Consumers of French, Italian, or Spanish wines, Scotch whiskey, and aperitifs like Aperol can expect to pay more due to a 15 percent tariff on European Union imports. The EU is a major exporter of wines and spirits to the U.S., with $3.4 billion worth of imported spirits in 2024 alone.
Despite efforts by the beverage industry to secure exemptions, the new trade deal does not include them. This is expected to increase the cost of imported wine or liquor in stores and restaurants. Tom Wark, executive director of the Association of Wine Retailers, warned that without negotiations to reduce reciprocal tariffs, there could be a significant drop in sales and job losses.
A letter from the Toast Not Tariffs Coalition, representing 57 associations in the U.S. alcohol industry, estimates that the tariffs could result in 25,000 job losses and nearly $2 billion in lost sales. Diageo, which produces brands like Guinness and Johnnie Walker, expects a $200 million loss due to the tariffs.
Cars and Car Parts: Rising Costs
The automotive sector is also experiencing increased costs. Consumers have already seen car prices rise over the past few months due to Trump’s tariffs. Cox Automotive predicts that vehicle sticker prices could increase by four to eight percent by year-end, pushing the average car price above $50,000.
Imported cars from the U.K., such as Range Rovers, face a 10 percent tariff, while Japan, the largest car exporter to the U.S., faces a 15 percent tariff. Toyota anticipates a $9.5 billion profit loss for the year, and other major automakers like General Motors, Stellantis, and Ford are also expecting significant financial impacts.
Clothing: Price Hikes for Apparel
Clothing is another sector facing substantial price increases. The U.S. is the largest importer of apparel, with much of it coming from Asian countries. A recent analysis by the Budget Lab at Yale found that clothing and textile tariffs could lead to 40% higher shoe prices and 38% higher apparel prices in the short term.
Vietnam, a major clothing exporter, faces a 20 percent tariff, affecting brands like Nike, Adidas, Zara, and Gap. Bjorn Gulden, CEO of Adidas, stated that the tariffs would directly increase product costs for U.S. consumers. Other countries like Bangladesh, Indonesia, and Cambodia also face high tariffs, while India faces a steep 25 percent tariff.
Coffee: Threatened by High Tariffs
The U.S. relies heavily on Brazil for its coffee supply, but Trump’s 50 percent tariff threatens the availability and price of coffee. Monica de Bolle, senior fellow at the Peterson Institute for International Economics, warned that the tariff could severely impact the market.
Household Products: Increased Costs for Essentials
Household items such as appliances, cookware, and furniture are also likely to become more expensive. The U.S. imports a significant amount of steel and aluminum from Canada and Mexico, and the 50 percent tariffs on these materials could lead to higher prices for everyday goods.
Heritage Steel, a family-owned cookware manufacturer in Tennessee, recently received a $75,000 tariff bill on an order of handles and expects future increases. Danny Henn, vice president of operations, said the company had to raise prices by 15 percent to cover the increased costs.
Watches: Luxury Items Hit Hard
Although not an essential item, luxury watches from Switzerland are expected to see significant price increases due to a 39 percent tariff. A Breitling watch that costs $9,900 could rise to $11,080, according to an analysis by Bob’s Watches. Brands like Rolex, Patek Philippe, and Omega may also see price hikes.
