This Is How Trump's Tariffs Will Affect You

Summary

Summary of "This Is How Trump's Tariffs Will Affect You"
The Ramsey Show Highlights
Release Date: February 24, 2025

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Introduction

In the February 24, 2025 episode of The Ramsey Show Highlights, hosted by the Ramsey Network, the discussion centers around the implications of President Trump's new executive order on tariffs. The episode delves into how these tariffs could affect American consumers and businesses, providing expert insights from seasoned hosts and financial advisors.

Understanding Trump's Tariffs

Speaker B begins by addressing a listener's question from Brianna in Washington, D.C., regarding the personal impact of President Trump's tariff executive order. He explains that the tariffs primarily target imports from Canada and Mexico, initiating a "waiting period" to observe the outcomes before full implementation (00:08). He emphasizes the inevitability of price increases resulting from tariffs:

Speaker B (00:30):
"Tariffs will affect us. There's no question, even President Trump has said, and I quote, that prices will go up. There's no question that that's how tariffs work."

Impact on Consumers

The discussion highlights that while the intention behind tariffs is to bolster American goods by making foreign products more expensive, the increased costs are typically transferred to American consumers. Speaker A reinforces this point with a real-world example:

Speaker A (01:51):
"I've got a friend building a house in Cabo in Mexico. Yeah. And he just had his, some of his appliances and his plumbing fixtures shipped in from the States. Mexico adds a 33%."

Speaker B confirms the accuracy of this example, illustrating the direct financial impact on consumers who purchase imported goods.

Business Implications

The hosts discuss the broader economic strategy of tariffs, acknowledging that while they aim to protect domestic industries, the effectiveness is mixed. Speaker A notes that while tariffs haven't significantly damaged the Canadian economy, they do deter American businesses from engaging in trade with affected countries:

Speaker A (03:00):
"The net effect of these things is... it slowed down the number of people that do business in Mexico."

Speaker B adds that American companies are unlikely to absorb the increased costs, leading to higher prices for consumers:

Speaker B (04:02):
"The companies do not eat taxes. We're going to raise corporate taxes. No, you're not. You raise corporate taxes. Corporate taxes are built into the price of the item you buy from Walmart."

Potential Offsets from the Administration

Speaker B introduces a counterbalance to the tariffs by discussing potential tax cuts and deregulation measures that could mitigate the negative effects on consumers:

Speaker B (04:04):
"If the president also extends his tax cuts, which will expire later this year, that would help the American consumer in lowering your costs."

He suggests that lowering taxes and reducing regulations for American businesses could offset the increased costs from tariffs, maintaining consumer prices despite the new trade policies.

Expert Opinions and Predictions

Speaker A expresses skepticism about the sustainability of tariffs with countries like Mexico and Canada, predicting that these tariffs are more of a negotiating tactic rather than a long-term strategy:

Speaker A (06:40):
"He threw a grenade in the middle of it. He's a New York street fighter and that's how he negotiates."

Speaker B concurs, emphasizing that the administration likely seeks fair trade deals without plunging into a trade war:

Speaker B (07:05):
"Nobody wants to get in a trade war."

Advice for Consumers

Concluding the discussion, Speaker B offers practical advice for listeners:

Speaker B (07:18):
"If you're debt free and you're working your way through the baby steps, even though it's never fun to have your cost of your household goods or the things that you do go up, you can weather that storm."

He underscores the importance of financial stability and staying debt-free as buffers against economic fluctuations caused by tariffs and other policy changes.

Final Thoughts

Speaker A advises listeners to remain calm and not to worry excessively about potential tariffs until they directly impact their finances:

Speaker A (07:45):
"Don't act on worries that haven't happened... don't do that on anything."

This advice aligns with the show's overarching philosophy of maintaining financial control and not succumbing to anxiety over unpredictable economic changes.

Conclusion

The episode effectively breaks down the complexities of Trump's tariff policies, highlighting both the immediate and potential long-term effects on American consumers and businesses. By providing tangible examples and balanced viewpoints, The Ramsey Show Highlights equips listeners with the knowledge to navigate these economic shifts. The key takeaway emphasizes the importance of financial preparedness and emotional resilience in the face of policy-induced changes.

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Notable Quotes:

• Speaker B (00:30): "Tariffs will affect us. There's no question, even President Trump has said, and I quote, that prices will go up. There's no question that that's how tariffs work."

• Speaker A (01:51): "I've got a friend building a house in Cabo in Mexico. Yeah. And he just had his, some of his appliances and his plumbing fixtures shipped in from the States. Mexico adds a 33%."

• Speaker B (04:04): "If the president also extends his tax cuts, which will expire later this year, that would help the American consumer in lowering your costs."

• Speaker B (07:18): "If you're debt free and you're working your way through the baby steps, even though it's never fun to have your cost of your household goods or the things that you do go up, you can weather that storm."

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This comprehensive summary captures the essence of the episode, providing valuable insights and actionable advice for listeners navigating the economic landscape shaped by Trump's tariff policies.

Transcript

[A]

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[B]

Ramsey Today's question comes from Brianna in Washington, D.C. can you explain how President Trump's new executive order on tariffs will affect me at a personal level? Well, this is my answer will be based on if the tariffs stand. Right now there's been an extension, if you're paying attention to the news. President Trump mentioned the tariffs would take place Canada, Mexico specifically. And then they responded, their governments responded. And so now there is a, we'll call it a waiting period to see how this plays out. But if the tariffs were to go into place, and I'm just going to be honest, so if this offends you folks, I honesty is what I'm going to go with. Tariffs will affect us. There's no question, even President Trump has said, and, and I quote, that prices will go up. There's no question that that's how tariffs work. Even though a tariff is placed on a foreign country that is on the goods and stuff that they would of course export to American companies. And so American companies will have to pay the tariff. The idea is to drive American goods, which I'm all for. But there's no question that tariffs are passed on from American companies to American consumers. So it's a long held economic strategy. Sometimes it works, sometimes it doesn't. We'll see how this plays out. It's too soon to tell because again, we've got a bit of a moratorium. But if they go into place on certain goods and services, you will see an increase in cost. The question is how much of an increase in cost. And that comes down to the American company that is again getting goods from Mexico or Canada. So that's how that works. And I've never seen companies not pass on increased costs to customers across the board.

[A]

I've got a friend building a house in Cabo in Mexico. Yeah. And he just had his, some of his appliances and his plumbing fixtures shipped in from the States. Mexico adds a 33%.

[B]

That's correct.

[A]

33% on top of that. So $1000 item becomes a 1500 dollar item.

[B]

That's right.

[A]

That's today.

[B]

That's happening. Yeah, that's right.

[A]

And has been that way for years.

[B]

Which is why the president came out of the house.

[A]

It's been that way for years.

[B]

That's right.

[A]

Okay. So that does not happen when Mexico sends stuff here. Correct. So we need to keep in mind that's what's really going on. If you are An American company wanting to sell things to customers in Mexico. You face a 33% upcharge today that's been in place for years. Did it crash either economy? No, no. Did it slow down the number of people that do business in Mexico? Yes. Hello.

[B]

Yeah.

[A]

I mean, and that's the net, net net effect of these things is. But this idea that somehow Americans are going to come up on the short end of this stick. Not really. Canadians are really worried about this. They're very worried about this. I've seen three Canadian business people in the last week that were very, very afraid.

[B]

Oh, absolutely.

[A]

Of what it's going to do to them. And it's much more damaging to them.

[B]

No question.

[A]

So.

[B]

But I do want to answer it honestly.

[A]

Yeah, Honestly, too. You will pay more if you buy something from Canada or you buy something from Mexico and that goes into effect, you will pay more.

[B]

That's right.

[A]

No question about it. 100%. The companies do not eat taxes. We're going to raise corporate taxes. No, you're not. You raise corporate taxes. Corporate taxes are built into the price of the item you buy from Walmart. Walmart does not pay taxes. You pay taxes. When you buy potato chips at Walmart, you pay all their taxes for them. It's built into the price. They don't work for nothing. You can't raise corporate taxes. It's impossible. All you did is raise prices to the consumer. Same exact thing.

[B]

That's right.

[A]

Exact same.

[B]

Here's the flip side of this because I was on FOX Business talking about, they asked me what I thought about this. If the president also extends his tax cuts, which will expire later this year, that would help the American consumer in lowering your costs. Cost, of course, you keep more of your paycheck. The second thing that the president I think will do, I think we're going to see this soon, is he's going to cut regulation on American businesses. And if he were to lower taxes on American businesses, that also offsets tariffs. So it is for people who are just hearing the media talk tariffs, you got to look at the whole picture and go, okay, if he does what you're talking about and he's now going after two countries that we do a lot of trading with, he's going, it's got to be fair. You've heard him use these words, his words, not mine. But if he also lowers taxes on American businesses and lowers regulation, then you might see very little. And that would be my hope. And I fully expect him to do that. I see nothing out of his administration that wouldn't do that. In that case, you're not going to feel tariffs in and of themselves. By themselves. I think that's what's going to happen.

[A]

The economics is not as simple as one variable. It's not more to it than that. Here's the other thing, and this is what I told my Canadian buddy, okay. He was, he was in meltdown mode, I'll bet. I said, let me just. I'll give you an opinion and it's worth exactly what you pay for it. There's not gonna be any tariffs on Canada. That's my opinion.

[B]

It already appears as though none of this is.

[A]

And there's not gonna be with Mexico. That's my opinion. But it may require that Mexico and Canada start treating American goods the way we treat their goods. Fair.

[B]

That's right. Nobody wants to get in a trade war.

[A]

Nobody wants to pay 33% upgrade.

[B]

Right.

[A]

And we do today. And so. And they want the. He wants the borders closed. So. But I think that this is a negotiating ploy on those. Now, I will tell you some of the other countries, absolutely. Where there's a massive trade deficit and there is a tariff offset. Like I'm talking about where, let's say Vietnam, okay. Where we pay. If you want to bring American goods into Vietnam, you pay big money to do that. And if you want to chip American ship Vietnamese goods to America, you pay nothing. And the trade deficit is huge. Meaning that we import a lot more from Vietnam than we export to them. That's the trade deficit. So they are taking jobs from America in that sense. And then they're charging overcharging for American goods coming in. So where he doesn't want a border closed with them, where he doesn't want something else in this negotiation, that one's probably in trouble. You're probably going to see one there.

[B]

That's right.

[A]

And then you're going to see if you're buying goods from Vietnam, you're probably going to see a huge increase. And what the cost of that is like I'm outlining with Mexico as an example. And so. But I don't think Mexico or personally, I don't think Mexico or Canada either one will ever see it. I think he was trying to get some other stuff and that was. He threw a grenade in the middle of it. He's a New York street fighter and that's how he negotiates.

[B]

That's exactly right.

[A]

We'll see.

[B]

He hasn't changed. Now, let's bring this back to our every. Everybody else not Just Brianna, who asked this question. It's a good question, by the way. I can tell you this. If you're debt free and you're working your way through the baby steps, even though it's never fun to have your cost of your household goods or the things that you do go up, you can weather that storm. And people who stand on that debt free stage over there, they're never stressed about inflation. And so it's really important.

[A]

And they're not picking up goods in their house going made in Mexico, wait a minute. Or made in Canada, wait a minute. That's right. There's probably not that much in your house that says that truthfully. So, you know, I think it's going to shake out.

[B]

I think you're going to see the tax cuts extended, Dave. I think you're going to see deregulation.

[A]

I don't, I don't think America wants a trade war with either one of their, either one of their border neighbors. I just really don't know. We'll see. We'll see. Let me tell you one other principle that we can, and we can leave this alone. Get all the prognostication and bull crap out of the air. Don't act on worries that haven't happened.

[B]

Yeah, that's right.

[A]

When it happens, you can think about it until it happens, it hadn't happened. Well, we might have a, we might have this or we might have that. It might snow. We might not. We might have a outbreak of the bird flu. We might not, we might have a, and we might not. And, and if you spend your life doing that, you're going to eat up all your calories and have no fun. So I'm serious. It's just, don't, don't do that on anything. Tariffs, politics, Trump being elected, Trump not being elected. Whatever, whatever it is you want to, you know, until it actually occurs and you actually see it in your hand messing with your wallet, then I would start making some adjustments to offset and say, well, I'm going to have to change the way I do that. It. But until then, it's all a bunch of malarkey on the news. And believe me, most of what's on the news is malarkey. Why refi refinances delinquent private student loans for struggling borrowers. Learn more at yrefy. Com Ramsey.