Welp, Trump's Tariffs Are Here. I Asked An Economic Analyst What To Expect.

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03-04-2025

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On Wednesday, President Trump announced sweeping tariffs at a minimum of 10% and up to 54% on imported goods from over 180 countries around the world (including, for some reason, islands populated only by penguins). Trump hyped the tariffs by calling April 2 "Liberation Day" and billed his White House Rose Garden announcement as a "Make America Wealthy Again" event.
So, what does this news mean for the average American? To learn more about how the Trump tariffs could hit your budget, I spoke with Mark Hamrick, Washington Bureau Chief and Senior Economic Analyst at Bankrate. Here are 8 things you need to know about the new Trump tariffs:
1. First, Hamrick explained that the tariffs are expected to raise prices on all kinds of goods. However, the impact of tariffs may not stop there.
Hamrick told BuzzFeed, "Economic observers are in wide agreement that the immediate impacts of import taxes, which are tariffs, raise prices, can lower corporate profitability, and can have the ultimate effect of inflaming inflation and dampening growth, which then can feed on through to the job market."
We're still stuck with stubbornly high prices after pandemic-era disruptions drove worldwide inflation, so the idea of paying even more for basic essentials sounds about as fun as getting a root canal every day, but here we are.
2. Then, Hamrick said that the tariffs have raised the risk of a recession in the next 12 months from one in four to above one in three.
A recession is generally defined as a broad and significant downturn in the economy with two or more quarters of negative GDP growth. During a recession, the job market tends to get tougher as more people lose their jobs and consumer spending slows down.
In the US, we most recently experienced a recession in 2020 due to COVID-19, and before that, in 2008, following the crash of the housing market.
3. One of the places where you're likely to start noticing even higher prices is at the grocery store.
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Hamrick said, "We should brace for higher food prices in the sense that we import a lot of, for example, fruits and vegetables from Canada and Mexico. There are just some things, broadly, including food that either we cannot or do not produce in this country."
Food items like bananas, avocados, chocolate, and my BFF coffee are expected to get more expensive as the tariffs go into effect.
4. Grabbing some takeout or eating a meal out at a restaurant will likely get more expensive, too.
Hamrick noted that going out to eat has continued to creep up in price, even before the tariffs, because restaurant owners have so many different expenses to think about, from rent and taxes to labor and food prices. But as the tariffs drive food prices up, "all those food prices then have to be passed along."
5. Many other things you might want or need to buy are manufactured outside the US, so prices are likely to rise on everything from shoes and clothing to smartphones and cars.
Though Trump has touted his tariffs as a way to bring manufacturing back to the US, Hamrick said, "We just don't have the production capacity in the United States to flip a switch." This means that the things we don't currently make here are going to cost more as the tariffs begin to take effect.
6. If you take any prescription medications, you might want to look into where they're manufactured, because tariffs could make your meds cost more, too.
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Hamrick cautioned that tariffs have the potential to impact other healthcare costs, depending on how the healthcare industry handles them. "If, indeed, the insurers, pharmacy benefit managers, etc, pass along those increases, then the cost of insurance could go up as well."
7. If you value your mental health, maybe don't look at your 401(k) balance today. Falling stocks are reducing the value of retirement investments, but depending on how close you are to retirement, you might not need to worry right now.
For people who are further away from retirement, stock market dips are less of a concern because we'll have more time to make up for any losses. Plus, if you're able to continue contributing to a 401(k) or IRA during a downturn, your contributions will buy more stocks, bonds, etc. while prices are low, which can lead to gains when the market eventually rebounds.
For people who are closer to or currently in retirement, however, this might be a good time to talk with an investment advisor who can help you protect your nest egg. Hamrick strongly advised against trying to DIY rebalancing your portfolio right now. He said, "You have to be right twice. That's being right on the timing of when you get out and being right on the timing of when you get in, and that generally is something that's not possible on the part of mere mortals."
8. Sorry to be the bearer of even more bad news, but once prices go up, they're not likely to come all the way back down.
"There's more elasticity with prices going up than there tends to be both in speed and magnitude going down," Hamrick said. "We see that all the time, whether it's gasoline prices or other things." To put it another way, prices go up quickly like they're in an elevator, and when (or if) they go down, it tends to be more slowly, like they're taking the stairs.
Plus, it's still too early to predict how much manufacturing might move to the United States vs. how much we might shift to buying goods from countries with lower tariffs. And then there's the possibility of more chaos ahead if the administration decides to issue even more new tariffs after buying patterns change.