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PHOENIX — The trade war President Donald Trump promised has begun, threatening the world economy and straining the United States’ longstanding alliances in Europe and Asia, the Associated Press reports. Goods coming into the U.S.
from dozens of countries and territories will now be taxed at sharply higher rates, which is expected to drive up the costs of everything from cars to clothes to computers. Dale Rogers, Professor of Logistics and Supply Chain Management at ASU, joined 12News at 4 to put it all in perspective. Tariffs and the supply chain Tariffs are a tax on imported goods.
The tariffs announced by Trump are the highest in nearly a century. Even products that are assembled in the United States, like Ford F-150s, use imported products for that assembly. "The Ford F-150 is the best-selling vehicle in the U.
S.; it's assembled in the United States, but components like, say stuff that goes into the transmission crosses borders seven times, three times in the U.S.
before it finally comes back and goes into the into the truck," Rogers said. Those goods will be taxed each time they come back into the U.S.
"So you could be paying multiple times and there's an amplification effect," Rogers said. One item that is expected to become more expensive is clothing. "Almost no clothes anymore come from the U.
S., almost nothing, almost everything you, I bet everything you got on has some link to overseas," Rogers said. "The other thing is, is that what we've done in the U.
S. over the last 40 years is we moved the messy stuff that can be done by someone much cheaper outside the United States." How tariffs affect your wallet The Yale Budget Lab estimates that Trump’s 2025 tariffs will increase U.
S. consumer prices by 2.3% in the short run, costing American households $3,800 a year, according to the Associated Press.
The tariffs announced on “Liberation Day” alone will push up prices by 1.3%, the lab calculates – a $2,100 tax on households. Clothing prices will go up 17% as higher import tariffs hit textiles from Southeast Asia and Bangladesh.
The lab says that Trump’s tariffs will reduce U.S. economic growth – which was 2.
8% in 2024 -- by 0.9 percentage points this year. The damage will also extend to Europe, Southeast Asia and China.
“We can expect global economic growth to start plummeting as trade flows decline, prices increase and businesses put off investments,’’ Wendy Cutler, a former U.S. trade official who is now vice president at the Asia Society Policy Institute, told the Associated Press.
Stock market reaction The S&P 500 fell 4.8% on Thursday, more than other major stock markets, the Associated Press reported. The Dow Jones Industrial Average dropped 1,679 points, and the Nasdaq composite sank 6%.
According to the Associated Press, everything from crude oil to Big Tech stocks to the value of the U.S. dollar against other currencies fell.
Even gold, which hit records recently as investors sought something safer to own, pulled lower. Some of the worst hits walloped smaller U.S.
companies, and the Russell 2000 index of smaller stocks dropped 6.6% to pull more than 20% below its record. Investors worldwide knew Trump was going to announce a sweeping set of tariffs late Wednesday, and fears surrounding it had already pulled Wall Street’s main measure of health, the S&P 500 index, 10% below its all-time high .
But Trump still managed to surprise them with “the worst case scenario for tariffs,” according to Mary Ann Bartels, chief investment officer at Sanctuary Wealth. Trump has previously said tariffs could cause “a little disturbance” in the economy and markets, and on Thursday, he again downplayed the impact as he left the White House to fly to Florida. “The markets are going to boom, the stock is going to boom and the country is going to boom,” Trump said.
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