Tariffs will boost prices a lot — here's how much

Summary

Consider This from NPR: "Tariffs will boost prices a lot — here's how much"
Release Date: April 9, 2025
Host: Ari Shapiro

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Introduction to Tariffs and Price Increases

In the April 9, 2025 episode of NPR's Consider This, host Ari Shapiro delves into the economic ramifications of President Donald Trump's recent tariff policies. The episode begins by contrasting Trump's campaign promises with the current economic reality.

Ari Shapiro introduces the topic by recounting a speech Trump gave in August, where he highlighted significant price hikes under the Biden administration:

"[...] Up 46%. Eggs. Wow." [00:16]

Trump vowed to reduce inflation and bring prices down swiftly:

"And we're going to straighten it out. We're going to bring prices way down, and we'll get it, get it done fast." [00:31]

However, Trump's subsequent campaign pledge to impose hefty tariffs contradicts his promise to lower prices, setting the stage for economic turmoil.

Trump's Tariff Policies and Market Turmoil

Trump announced plans for 10-20% tariffs on countries deemed to be "ripping us off." When the details were unveiled, actual tariffs exceeded 20% on several nations, disrupting global markets:

"The reciprocal tariffs, as Trump calls them, clicked into place at midnight." [02:14]

The immediate aftermath saw global stock markets plummet, increased recession fears, and intense criticism from economists and the public. Despite the backlash, Trump remained steadfast, defending his policies at a National Republican Congressional Committee Dinner:

"The shrill voices that you're hearing this week about tariffs are same scoundrels and frauds who never thought twice about when the United States lost 90,000 factories and plants." [01:23]

Price Impact Analysis: A Shopping Cart Approach

To illustrate the tangible effects of these tariffs on consumers, Shapiro collaborates with Martha Gimbel, Executive Director and Co-Founder of the Budget Lab at Yale University, conducting a virtual shopping trip.

Clothing

The first stop is the clothing section, where a plain white T-shirt is projected to increase by approximately 45%:

"That's going to cost you quite a bit more, probably around 45%." [05:04]

Gimbel explains that the heavy tariffs on imports from countries like Vietnam significantly impact clothing prices since the U.S. imports most of its apparel.

Food Staples

In the food section, staple items show varied price changes:

• Sugar: Only a 4% increase due to substantial domestic production.

  "Prices are only going to go up about 4%." [06:09]

• Rice: A steep 27% rise, primarily because much of the rice is imported from Asian countries facing high tariffs.

  "The price of rice is going up by about 27%." [06:50]

Household Items

Household necessities like rubber dish gloves face a 16% price hike:

"About 16%." [07:10]

This increase stems from low domestic rubber production, making the U.S. reliant on imports susceptible to tariffs.

Pharmaceuticals

While pharmaceuticals were initially exempt from tariffs, there are discussions about imposing them, potentially leading to a 15% price increase:

"They are talking about imposing tariffs on pharmaceuticals, and if they do that, we think that prices will rise about 15%." [07:46]

Gas Prices

Gasoline prices currently remain tariff-free and are declining. However, this drop is misleading as it reflects market fears of a recession rather than a genuine decrease in costs:

"The reason they're going down is that markets think we're entering a recession, at which point we'll all start using less gas." [08:14]

Household Budget Implications

Gimbel's Budget Lab estimates that the cumulative effect of these price increases amounts to an average of $4,600 per family annually:

"On average, we're seeing that prices will go up about $4,600 for people per family." [09:12]

This burden disproportionately affects lower-income families, who spend a larger portion of their income on goods susceptible to tariffs. Higher-income households, spending more on services like education and pet care (which are not tariffed), are less impacted.

National Economic Impact

Examining the broader economic consequences, Gimbel highlights that the United States itself is a significant loser in the tariff-induced system. Canada follows as the next biggest casualty, while China, the primary target of the tariffs, fares slightly better than the U.S. Intriguingly, regions like the EU and the UK might experience long-term benefits as global trade dynamics shift:

"The United States loses in terms of its gross domestic product." [10:39]
"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." [10:51]

These changes indicate a retreat from global economic integration, potentially fostering self-reliance at the expense of international collaboration.

Conclusion and Insights

As the episode concludes, Shapiro reflects on the unpredictable nature of tariffs and their enduring impact on the economy:

"Tariffs appear to be winning out. A whole lot of stuff is about to get more expensive." [02:21]

The analysis underscores the complexity of balancing political promises with economic realities, revealing that while tariffs may aim to protect domestic industries, they inadvertently raise consumer costs and strain international relations.

Martha Gimbel summarizes the situation with a touch of sarcasm:

"I hate to laugh, but, you know, this is just a reminder that there is a lot of stuff that we don't produce in the United States." [07:15]

This episode of Consider This provides a comprehensive examination of how Trump's tariff policies are reshaping the economic landscape, affecting everything from individual consumer choices to national GDP.

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Produced by Erica Ryan and Connor Donovan with audio engineering by Simon Laszlo Jansen. Edited by Christopher and Talyatta. Executive Producer: Sami Yenigun.

Transcript

[Ari Shapiro]

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.

[Donald Trump]

You're looking at things behind me. They did a nice job. Wow.

[Ari Shapiro]

He started listing price hikes.

[Donald Trump]

Look at that. Up 46%. Eggs. Wow.

[Ari Shapiro]

That occurred under the Biden administration.

[Donald Trump]

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.

[Ari Shapiro]

And then Trump promised to fix it.

[Donald Trump]

And we're going to straighten it out. We're going to bring prices way down, and we'll get it, get it done fast.

[Ari Shapiro]

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 talked about that one in August, too.

[Donald Trump]

We're going to have 10 to 20% tariffs on foreign countries that have been ripping us off for years.

[Ari Shapiro]

When he announced the details of that plan last Wednesday, President Trump's tariffs were actually even higher than 20% 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.

[Donald Trump]

The shrill voices that you're hearing this week about tariffs are same scoundrels and frauds who never thought twice about when the United States lost 90,000 factories and plants. Think of that 90,000.

[Ari Shapiro]

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 Levitt suggested that the tariffs were a negotiating tactic all along.

[Martha Gimbel]

Many of you in the media clearly missed the art of the deal. You clearly failed to see what President Trump is doing here.

[Ari Shapiro]

So as of this writing, we are still looking at a set of tariffs that are much larger than the US has seen in decades. Which means when it comes to those two promises, lower prices and higher tariffs, tariffs appear to be winning out. 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.

[Caroline Levitt]

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[Ari Shapiro]

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[Ari Shapiro]

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 Gimble, 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. Okay, 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?

[Martha Gimbel]

That's going to cost you quite a bit more, probably around 45%.

[Ari Shapiro]

Wow. Wow. Why so much?

[Martha Gimbel]

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.

[Ari Shapiro]

Sure, clearly.

[Martha Gimbel]

And so, as you know, more retaliatory tariffs are put on as other countries retaliate against us. The numbers just go up and up.

[Ari Shapiro]

We are 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.

[Martha Gimbel]

Yeah, it's not going to be good if you need to buy new clothes for your rapidly growing kid.

[Ari Shapiro]

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?

[Martha Gimbel]

So I have excellent news for you on the sugar front. Yeah, Prices are only going to go up about 4%.

[Ari Shapiro]

Only 4%. That's great in the context of 45% or more for clothes. Why is that less than clothing?

[Martha Gimbel]

We do have more domestic production of sugar, and so 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.

[Ari Shapiro]

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 US you're probably going to be okay, and if not, you might be paying more?

[Martha Gimbel]

Oh, you mentioned rice. I regret to inform you the price of rice is going up by about 27%.

[Ari Shapiro]

Drat. And I assume that's just because a lot of rice comes from Asian countries where tariffs are going to be high.

[Martha Gimbel]

Yeah, exactly.

[Ari Shapiro]

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?

[Martha Gimbel]

Ooh, about 16%.

[Ari Shapiro]

Okay, 16%. Why is that?

[Martha Gimbel]

You know, again, we don't really produce rubber in the United States. You know, I hate to laugh, but, you know, 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.

[Ari Shapiro]

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?

[Martha Gimbel]

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.

[Ari Shapiro]

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 gonna save some money at the pump?

[Martha Gimbel]

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.

[Ari Shapiro]

Is it also related to people anticipating there being less shipping people because fewer goods are going from China to the United States, for example?

[Martha Gimbel]

I hadn't thought about that, but I assume that that is, in fact, playing a role.

[Ari Shapiro]

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?

[Martha Gimbel]

Yeah. So on average, we're seeing that prices will go up about $4,600 for people per family.

[Ari Shapiro]

Per year.

[Martha Gimbel]

Per family per year.

[Ari Shapiro]

Wow, that's a lot of money.

[Martha Gimbel]

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.

[Ari Shapiro]

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.

[Martha Gimbel]

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.

[Ari Shapiro]

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?

[Martha Gimbel]

Well, the biggest loser is Canada, but after them, the second biggest loser is us. So congratulations to us.

[Ari Shapiro]

The United States loses the most.

[Martha Gimbel]

The United States loses in terms of.

[Ari Shapiro]

Its gross domestic product. Well, how does China fare in all of this, given that it is the primary target above all others?

[Martha Gimbel]

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.

[Ari Shapiro]

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.

[Martha Gimbel]

Anytime.

[Ari Shapiro]

This episode was produced by Erica Ryan and Connor Donovan with audio engineering by Simon Laszlo Jansen. It was edited by Christopher and Talyatta. Our executive producer is Sami Yenigun. It's Consider this from npr. I'm Ari Shapiro.

[Martha Gimbel]

On this week's episode of Wild Card, actress Elizabeth Olsen reflects on being a Marvel superstar. I think I haven't always successfully made choices in my work that are aligned with my personal taste, and that is something I feel like I'm still trying to prove. I'm Rachel Martin. Join us for NPR's Wildcard podcast, the show where cards control the conversation. Having news at your fingertips is great, but sometimes you need an escape and that's where Short Wave comes in. We're a joy filled science podcast driven by wonder and curiosity that will get you out of your head and in touch with the world around you. Listen now to Short Wave, the science podcast from npr.

[Caroline Levitt]

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