Two weeks before the Trump administration is expected to impose reciprocal tariffs on its trading partners, economists say prices are likely to rise as a result. Federal Reserve Chair Jerome Powell said Wednesday that inflation is likely to increase because of President Donald Trump’s tariffs.
Consumers could pay up to 50% of the increased tax on imported goods, according to ADP Research Chief Economist Nela Richardson.
“Tariffs by definition are a tax on an imported good, so depending on the industry, those costs are shared between the producer and the consumer,” Richardson said during a press briefing Wednesday with the Port of Los Angeles executive director. “It is a shared increase in an imported good.”
On Tuesday, Treasury Secretary Scott Bessent said the Trump administration plans to reveal reciprocal tariff numbers to its trading partners on April 2. The tariffs are designed to match what other countries charge for U.S. exports. President Donald Trump said Sunday that the tariffs are intended to get back “a lot of the wealth that we so foolishly gave up to other countries, including friend and foe.”
Anderson said new tariffs could prompt American consumers to shift to more domestic products to save money.
“The complication in a global world is that many of our products have come from many countries,” she said, even if those products are technically manufactured in the United States.
How much a product will increase in price will depend on the industry, the specific item and the evolution of Trump’s tariff policy. Anderson expects trade policy to become more clear in three to six months.
“The more clarity there is on the policy changes, wherever they’re coming from, the better off the U.S. economy, the better off the consumer, the better off hiring is in the future,” Anderson said.
Tariffs are typically enacted to protect innovative industries or to protect the workforce. She said the United States has been working to diversify and rebalance its supply chain since the pandemic, when many companies were not able to source the materials they needed to make or sell their products.
The uncertainty of tariffs at a time when companies are already reorienting their supply chains is playing out in the labor market, where employees are staying with their jobs and employers are hesitant to hire, Anderson said.
Still, she said the labor market is extremely stable and the U.S. economy overall has a solid foundation. While tariffs are causing consumer confidence to wane, Americans are still spending.
“A good growth rate for the economy is still in the cards right now,” she said.
