US consumers will likely bear burden of Trump tariffs

Investing.com -- As President-elect Donald Trump prepares to enforce sweeping caller tariffs, American consumers are poised to look important economical repercussions, according to a caller probe enactment from ING. 

Trump's proposals see 60% tariffs connected Chinese imports and 10-20% tariffs connected goods from different nations, aimed astatine boosting home manufacturing and reducing reliance connected overseas imports.

However, ING warns these measures volition apt effect successful higher user costs.

“Given that disposable idiosyncratic income successful the US past twelvemonth was $20.547 trillion, this tariff would correspond 2.6% to 3.9% of disposable income, if afloat passed connected to consumers [the tariffs], i.e. $1,500 to $2,400 per capita,” wrote the bank.

They explained that this would beryllium a important burden, fixed that user spending drives 70% of the U.S. economy.

Historical examples enactment this prediction, according to ING, noting that successful 2018, a 20% tariff connected imported washing machines led to a 12% emergence successful user prices wrong months, demonstrating however costs are often passed down the proviso chain. 

“Consumers bore much than 60% of the tariff outgo connected foreign-made appliances,” ING noted.

Additionally, portion tariffs person boosted customs revenues significantly—$257 cardinal nether Trump-era duties since 2018—this gross is mostly offset by accrued user prices.

ING highlights that tariffs enactment arsenic a tax, reducing disposable income and limiting user choices.

They estimation that applying Trump’s projected tariffs to $3.1 trillion successful imported goods could rise customs revenues to arsenic overmuch arsenic $790 billion, but astatine a steep outgo to households, equivalent to 2.6-3.9% of disposable income. 

ING cautions that specified policies could besides substance inflation, perchance adding 1 percent constituent to existent levels.

"Shifts successful user behaviour are 1 of the reasons wherefore expanding tariffs cannot go a superior root of authorities revenue," ING concluded, emphasizing the broader economical challenges specified policies whitethorn pose.