Tariffs will boost prices a lot — here's how much
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Here's a tale of two campaign promises. The first is from back in August. Then-candidate Donald Trump delivered it at a lectern flanked by tables full of groceries. You're looking at things behind me. They did a nice job. Wow. He started listing price hikes. Look at that. Up 46 percent eggs. Wow. That occurred under the Biden administration. I haven't seen Cheerios in a long time. I'm going to take them back with me.

Bacon is through the roof. They're all through the roof. The milk, everything is bad. And then Trump promised to fix it. And we're going to straighten it out. We're going to bring prices way down and we'll get it done fast. But his promise to cut inflation and bring down prices has run headlong into another campaign pledge. You know, the one that's been completely dominating the news for the past week. He

He talked about that one in August, too. We're going to have 10 to 20 percent tariffs on foreign countries that have been ripping us off for years. When he announced the details of that plan last Wednesday, President Trump's tariffs were actually even higher than 20 percent on many countries. And that threw the global economy into turmoil. Stock markets around the world saw huge losses. In the U.S., many analysts raised their odds for a recession.

But Trump plowed full steam ahead. Tuesday night at the National Republican Congressional Committee dinner, he bragged about his tariffs and dismissed his critics. The shrill voices that you're hearing this week about tariffs are the same scoundrels and frauds who never thought twice about when the United States lost 90,000 factories and plants. Think of that, 90,000. The reciprocal tariffs, as Trump calls them, clicked into place at midnight.

Be cool, he posted Wednesday morning on social media. Eventually, the chaos in the markets got so extreme that on Wednesday afternoon, Trump announced that he was resetting the most extreme tariffs to a much lower 10% across the board for 90 days, with the exception of China, which he bumped up to 125%.

And tariffs on cars, steel and aluminum will stay in place. White House Press Secretary Caroline Leavitt suggested that the tariffs were a negotiating tactic all along. Many of you in the media clearly missed the art of the deal. You clearly failed to see what President Trump is doing here. So as of this writing, we are still looking at a set of tariffs that are much larger than the U.S. has seen in decades, which

Which means when it comes to those two promises, lower prices and higher tariffs, tariffs appear to be winning out. Consider this. A whole lot of stuff is about to get more expensive. We'll take a deep dive into the shopping cart. From NPR, I'm Ari Shapiro.

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It's Consider This from NPR. The economy likes predictability, and the tariffs this week have been wildly unpredictable. We know that they're going to impact the economy, even if we can't say exactly how. So we're going to do our best looking today at how prices will change for consumers. Tomorrow, we'll talk about the impact on businesses. The Budget Lab at Yale University has been trying to calculate exactly how much more things are likely to cost.

I took a virtual shopping trip with Martha Gimbel, the lab's executive director and co-founder. And as you'll hear, we talked before Trump's maybe temporary, maybe permanent about face today. OK, let's imagine we have parked our car, we have grabbed the shopping cart and we are rolling into the big box store, whether that is Target or Walmart or Costco, take your pick. Let's head first to the clothing section. I want to buy a plain white T-shirt. How much more is that likely to cost?

That's going to cost you quite a bit more, probably around 45%. Wow. Wow. Why so much? We really don't produce a lot of clothing in the United States. We import almost all of it. And so these really heavy tariffs, particularly in countries like Vietnam, are going to really hit clothing more than almost anything else.

I should also take this moment to say I'm giving specific numbers here, but this is an ever-changing situation. Sure, clearly. And so as more retaliatory tariffs are put on, as other countries retaliate against us, the numbers just go up and up. We were recording this midday on the East Coast, and by the time night falls, the numbers could have changed. But clothing prices are going up, and I assume that's true of T-shirts, underwear, socks, all the basics.

Yeah, it's not going to be good if you need to buy new clothes for your rapidly growing kid. Okay, let's roll our shopping cart over to the food section. And let's say I want to pick up a staple like sugar to do some baking. How does the cost of a pound of sugar change under these new tariffs? So I have excellent news for you on the sugar front. Yeah? Prices are only going to go up about 4%. Only 4%. That's great in the context of 45% or more for clothes.

Why is that less than clothing? We do have more domestic production of sugar. And so, you know, even though you will see domestic producers raising prices, you just won't see the same impact. So if you're hoping to indulge your sweet tooth to help you get through this moment,

Relatively speaking, it's a good place to be. And so is the same more or less going to be true of staples like rice or flour, that it just depends on where it's grown? And if there's a lot of it in the U.S., you're probably going to be okay. And if not, you might be paying more. Ooh, you mentioned rice. I regret to inform you the price of rice is going up by about 27%. Drat.

And I assume that's just because a lot of rice comes from Asian countries where tariffs are going to be high. Yeah, exactly. Okay. If I'm going to be cooking, I will need to clean up. Let's buy a pair of rubber dish gloves. How does that price change? Ooh, about 16%. Okay. 16%. Why is that? You know, again, we don't really produce rubber in the United States. I,

You know, I hate to laugh, but this is just a reminder that there is a lot of stuff that we don't produce in the United States. And we have really had a huge advantage from global supply chains that have allowed us to buy a bunch of things relatively cheaply. You know what? All these tariffs are giving me a headache. So let's roll over to the pharmacy. And what would it cost me to buy a bottle of a generic painkiller, the equivalent of Advil, aspirin, or Tylenol? So at the moment...

pharmaceuticals have been exempted. However, they are talking about imposing tariffs on pharmaceuticals. And if they do that, we think that prices will rise about 15%. So I might buy your aspirin now. Okay, so we've checked out of the big box store, hopped back into the car, and I need to fill it up with gas on the way home. I've heard oil prices by the barrel have been going down. Am I at least going to save some money at the pump? So at the moment, gas is not being tariffed.

But I think it is really important to talk about the fact that gas prices have been going down. Because you might hear that and think, oh, thank goodness. But the reason they're going down is that markets think we're going into a recession, at which point we'll all start using less gas. And so oil prices going down is not actually a good sign.

Is it also related to people anticipating there being less shipping because fewer goods are going from China to the United States, for example? I hadn't thought about that, but I assume that that is in fact playing a role. You're welcome. I wish I could say that was my own idea.

Okay, now that we've done all of our shopping, let's talk more broadly about the effects that these price hikes are likely to have on household budgets as a whole. Your lab has calculated how this is likely to affect families in different income groups. Broadly speaking, what did you find?

Yeah. So on average, we're seeing that prices will go up about $4,600 for people. Per family per year? Per family per year. Wow. That's a lot of money. It's a lot of money. Most people do not have that amount in their budget just ready to hand out.

We should say this will impact people at the bottom of the income distribution more relative to their income than it does people at the top. I guess that makes sense because if we think of a tariff as a tax, we know that sales taxes disproportionately influence people who make less money. If this makes things cost more, it's going to have a disproportionate impact on people who earn less.

I mean, also think about tariffs, right? They're placed on goods. So poor people tend to spend more of their income on goods, right? If you have a tight budget, you're buying food, you're buying gas. If you're richer, you may be paying more services, right? You're paying for tutors for your kids. You're paying for a dog walker. Those are not tariffed. Right.

Well, if that's the impact on the individual, let's talk about the impact on nations. You have looked at how damaging the system of tariffs is likely to be to the gross domestic product of various countries around the world. Who are the biggest winners and losers?

Well, the biggest loser is Canada. But after them, the second biggest loser is us. So congratulations to us. The United States loses the most. The United States loses. In terms of its gross domestic product. Well, how does China fare in all of this, given that it is the primary target above all others so far?

China doesn't do well, but it does do slightly better than the United States. I should say you'll see places like the EU or the UK actually do better in the long run as world trade adjusts to the new reality. So it just speaks to the way that we're really taking ourselves out of the global economy. Martha Gimbel is the executive director and co-founder of the Budget Lab at Yale University. Thank you so much for taking this shopping trip with us. Anytime.

This episode was produced by Erica Ryan and Connor Donovan with audio engineering by Simon Laszlo Janssen. It was edited by Christopher Intagliata. Our executive producer is Sammy Yenigan. It's Consider This from NPR. I'm Ari Shapiro. This message comes from Thrive Market. The food industry is a multibillion-dollar industry, but not everything on the shelf is made with your health in mind.

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