Latest news with #TheBudgetLab
Axios
22-05-2025
- Business
- Axios
What to know about the No Tax on Tips Act and who it affects
The no-tax-on-tips provision is getting closer to becoming a reality for the nation's tipped workers. Why it matters: The Senate passed the bill to eliminate federal income tax on tips Tuesday — a campaign promise by President Trump. A version of No Tax on Tips is included in Trump's " Big, Beautiful Bill" that's making its way through the House. The massive bill proposes extending Trump's 2017 tax cuts and cuts to social safety programs. What is the No Tax on Tips Act? The big picture: The No Tax on Tips Act or Bill S. 129 proposes amending the Internal Revenue Code to exempt "cash tips" from federal income tax. Eligible employees will be allowed to claim a 100% deduction of up to $25,000 per tax year. Sen. Ted Cruz (R-Texas) introduced the bill, which was sponsored by a bipartisan group of senators, in January. Which workers would be eligible for tax exemption Zoom in: Waiters, bartenders and delivery drivers are examples of employees who could become eligible for the tax exemption, Senate Minority Leader Chuck Schumer (D-New York) said in a statement. Tipped workers tend to be lower income — the median weekly wage for tipped occupations was $538 in 2023 compared to $1,000 for non-tipped workers, according to estimates from The Budget Lab at Yale University. Roughly 4 million U.S. workers were in tipped occupations in 2023 or 2.5% of all employment, per Yale Budget Lab. To qualify for the tax deduction, there would be a $160,000 earnings limit for 2025, which would be indexed for inflation yearly. When does no tax on tips start? What we're watching: The bill has to be approved by the House of Representatives and signed by Trump to become law. If approved, the bill is expected to apply to taxable years beginning after Dec. 31, 2024. The House version sets a Dec. 31, 2028, end date for the tax deduction. Current IRS tax rule on tips How it works: The Internal Revenue Service says current workers who receive cash tips of $20 or more monthly must report those earnings to employers.
Yahoo
21-05-2025
- Business
- Yahoo
Tariffs trigger price hikes: Shoes, clothing and toys to get more expensive this summer
Skyrocketing prices might not be top of mind for many consumers this spring, especially in light of significantly lower gas prices at the pump in early May. But many economists warn that consumers should get ready to pay more for some things as soon as summer. So maybe it isn't a bad idea to start thinking about back-to-school shopping even before summer vacation begins. Some shoppers might want to keep an eye on Memorial Day sales to knock some gifts off a Christmas list. Sure, it sounds strange. But it's one more weird twist in the new economic realities associated with much higher tariffs in 2025 on many goods that consumers buy. Can we expect to see price hikes of 15% or more on shoes or a sweater? Maybe. If so, we could be talking about the kind of consumer indignation we saw when egg prices soared. Eggs are up 18% over the past four months or 49% in a year, according to Ernie Tedeschi, director of economics at The Budget Lab at Yale University. Price hikes related to tariffs are not showing up yet in many goods, like clothing, because the items aren't perishable and retailers continue to sell some "pre-tariff inventory," Tedeschi told the Detroit Free Press, part of the USA TODAY Network. But consumers can expect price spikes on clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a nonpartisan research center that provides analysis of federal policy proposals for the U.S. economy. Shoe prices are expected to be 15% higher and apparel prices are expected to be 14% higher in the short run, according to the Budget Lab. And those prices could increase more in the long run. The report issued May 12 estimated the effects of all U.S. tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the United Kingdom and the auto tariff relief that could apply to automakers. Right now, it's hard to judge whether we'll see a flood of price increases at every store or shortages on the shelf. "We saw during the avian flu crisis that not all grocery stores hiked egg prices," Tedeschi said. "Some simply chose to run out of eggs. So, price rises in the end might look less painful than some feared, but that doesn't necessarily mean that consumers haven't been hurt in other ways." Consumer protection: Crackdown on hidden fees when booking hotels and buying tickets hits in time for summer Overall, we could see an average per-household consumer loss of $2,800, the Budget Lab reported, as a result of higher tariffs. The price level from all 2025 tariffs rises by 1.7% in the short run. Tariffs are viewed by economists as regressive taxes. How much individual households will actually see their real incomes, or after-tax incomes, fall will vary based on their spending patterns and what tradeoffs a consumer is willing to make, such as substituting a brand that didn't see a price increase. Exactly when we'll pay higher prices on individual items will vary. Some prices on some items could rise anywhere from a week to a couple of months. "When the United States imposed tariffs on Chinese washing machines in January 2018," Tedeschi said, "consumer washing machine prices didn't rise until April that year due to a combination of retailer inventory and supply chain lags." Hallmark surprised those who collect Keepsake ornaments by advising customers they will pay more than the listed price in the 2025 Dream Book, which was handed out at stores in April. Prices were raised in early May. In a statement to the Free Press, Hallmark said: "We are committed to maintaining fair pricing across our portfolio and are fortunate to manufacture 75% of our core products in our Kansas-based manufacturing facilities, including greeting cards and gift wrap." But Hallmark acknowledged that it "made the necessary decision to adjust pricing on select imported products from our gift and ornament collections that are impacted by the current economic climate." On May 15, Walmart said it would have to start raising prices on many goods later in May and June to address higher costs associated with tariffs. Already, the company said, the price of bananas at Walmart rose to 54 cents a pound, up from 50 cents, thanks to higher tariffs. The Budget Lab analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. We all know the tariff story is still unfolding. As of May 12, the U.S. and China agreed to a reduction in tariffs for 90 days as negotiations continue. "The May 12 changes to the China rate alone reduce the negative economic impact of all 2025 tariffs to date by 40%," according to the Budget Lab. Even so, the Trump trade war has meant that U.S. consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to the estimates from the Budget Lab. Without the lower China tariffs − but with a trade deal between the United States and the United Kingdom and newly proposed auto rebates − the average effective tariff rate would have been 27.6%. Consumers could have a bit of calculating to do when it comes to how much they might be willing to buy early and how willing they might be to hold off shopping. "The problem with trying to bulk purchase items in a time of uncertainty is that many other consumers are doing it, too," Tedeschi said. "This increase in demand can itself lead to the very higher prices consumers are trying to avoid." He added that it is substantially uncertain where China tariffs in particular are going to end up over the summer. "It's easy to imagine them rising or falling from the current 30%," Tedeschi said. "That said, if there are significant tariffs on China still in place this summer, it's highly likely they will put upward pressure on apparel and electronics prices for back-to-school shopping." His advice: Don't panic-buy. Take more time to research and comparison shop, including researching import content for potential large purchases like appliances and cars. And he said: "Pay attention to the news and the data; ignore the noise and the vibes." Over the next few months, experts say, consumers could experience sticker shock when they shop for a long list of items. Tariffs are not just about higher prices on many cars or trucks. Jason Miller, who keeps a close eye on inventories as an associate professor of logistics in the department of supply chain management at Michigan State University's Eli Broad College of Business, noted that there's lag between when products are imported and when they hit store shelves. But he expects that price tags on many goods will start reflecting the impact of tariffs by June and July. Consumers, he said, probably will see price increases on clothing and apparel; footwear; toys and games; and small electrical appliances, including microwaves, toasters and mixers. Price hikes, he said, might also be expected for household items for bathrooms, including items made of plastic; children's car seats and strollers; and some types of furniture. For items like toys, Miller said, percentage increases in the double-digit range seem probable. The same's true, he said, with car seats and strollers. All are items for which China plays a major role in exporting goods to the United States. The Toy Association, which has more than 900 members, is urging the U.S. government to grant a reprieve from tariffs on toys imported from China to make sure toys available for the holiday season. The Toy Association wants U.S. leaders to secure "zero for zero" tariffs on toys through bilateral negotiations with trading partners. Trump famously stated: "Maybe the children will have two dolls instead of 30 dolls." He added, "Maybe the two dolls will cost a couple of bucks more than they would normally." The New York Post ran a Page One cover May 1 declaring: "Skimp on the Barbie." Miller doesn't expect many supply chain snarls in the weeks ahead, as a rush of imports into the United States is expected now. "The biggest unknown now," Miller said, "is what happens with the remaining reciprocal tariffs ... at the end of the 90-day July pause." "The other unknown," Miller said, "is what happens to domestic demand for manufacturing." Regional Federal Reserve Bank manufacturing surveys showed significant weakening of new orders in the past few months, especially in April, including upward pressure on the cost of imported materials and supplies. As of May 13, a 10% tariff on goods entering the United States is to stay in place but, according to Reuters, U.S. officials remain in talks with several countries to lower additional tariffs imposed by Trump. The 10% tariff was imposed on nearly all countries by Trump on April 2. Consumers saw inflation hit a four-year low as the consumer price index rose year-over-year by 2.3% in April, according to the May 13 report by the U.S. Bureau of Labor Statistics. Prices fell on some items in April, including airline tickets and used cars and trucks. Used car and truck prices were down 0.5% month over month in April after a 0.7% drop in March. Year-over-year prices for used vehicle were up 1.5% in April. Gasoline prices were down 0.1% month over month, following a 6.3% drop in March and a 1% decline in February. Gas prices were down 11.8% over 12 months through April, according to the Labor Department. PNC Chief Economist Gus Faucher noted in his report that consumers saw little indication in the April CPI report of tariffs causing higher goods prices. But he warned that tariffs are likely to drive prices and inflation up over the next few months. "Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all U.S. trading partners are much higher than they were at the beginning of 2025," Faucher said. Diane Swonk, KPMG's chief economist, noted in a report: "This could be the last benign inflation report for a while." Make no mistake, consumers and business remain extremely uncertain about what's next when it comes to tariffs. On May 8, for example, major footwear manufacturer Wolverine Worldwide stated in its earnings report that it would not provide a full-year 2025 outlook as a result of "uncertainty around tariffs and related macro-economic conditions." The company, which is based in Rockland, also then said that it is withdrawing its 2025 guidance issued on Feb. 19. Wolverine Worldwide stated in its footnotes that risk factors ahead include price increases, risks associated with foreign sourcing, tariffs, as well as economic conditions, such as inflationary pressures, employment rates and interest rates. Wolverine Worldwide shoe brands include Merrell, Saucony, Hush Puppies, Chaco and Stride Rite. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands. How much of the higher tariffs will be passed along directly to consumers remains unknown − and we don't know just yet where tariffs will end up. "The recent de-escalation with China to lower tariffs from 145% to 30% for 90 days is welcome news," according to an economic outlook issued May 13 by KPMG. "That will help to restart trade between the two countries, but it is unclear whether tariffs will rise or drop at the end of the pause." The KPMG report indicated that the Federal Reserve "is not expected to cut rates until December due to a bout of stagflation, a period of rising inflation coupled with escalating unemployment." We've not dealt with the troubling mix of a sluggish economy and high inflation at the same time since the 1970s. "Uncertainty is just off the charts," said Charles Ballard, professor of economics emeritus at Michigan State University. Even the tariffs under the 90-day pause, he said, are much more restrictive than what was in place months ago. "Trade barriers were very low when President Trump took office. He has contended again and again that other countries put up severe barriers to American exports. There is very little truth to that," Ballard said. Some cases exist, he said, such as Canadian tariffs on dairy products. "But for the most part, we had low tariffs on imports from other countries, and other countries had low tariffs on our exports." Overall, though, he said, American businesses are feeling whiplash as the expected tariffs have changed quickly in 2025. Does a company go ahead and place an order, Ballard asked, knowing that it may face a very different tariff when it is filled from what it faces now? Baby strollers, baby car seats, cell phones, laptops and toys, he said, are some of the items that face the greatest uncertainty. Shopping for back-to-school or Christmas now might be a good idea, Ballard said, if you're concerned about shortages or higher prices. "But it's very hard to predict exactly where the prices will be, because we don't know what the policy will be in the future," Ballard said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Expect a high-priced summer as tariffs hit apparel and footwear Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Tariffs trigger price hikes: Shoes, clothing and toys to get more expensive this summer
Skyrocketing prices might not be top of mind for many consumers this spring, especially in light of significantly lower gas prices at the pump in early May. But many economists warn that consumers should get ready to pay more for some things as soon as summer. So maybe it isn't a bad idea to start thinking about back-to-school shopping even before summer vacation begins. Some shoppers might want to keep an eye on Memorial Day sales to knock some gifts off a Christmas list. Sure, it sounds strange. But it's one more weird twist in the new economic realities associated with much higher tariffs in 2025 on many goods that consumers buy. Can we expect to see price hikes of 15% or more on shoes or a sweater? Maybe. If so, we could be talking about the kind of consumer indignation we saw when egg prices soared. Eggs are up 18% over the last four months or 49% in a year, according to Ernie Tedeschi, director of economics at The Budget Lab at Yale University. Price hikes related to tariffs are not showing up yet in many goods, like clothing, because the items aren't perishable and retailers continue to sell some "pre-tariff inventory," Tedeschi told the Detroit Free Press. But consumers can expect big price spikes to hit clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a nonpartisan research center that provides analysis of federal policy proposals for the U.S. economy. Shoe prices are expected to be 15% higher and apparel prices are expected to be 14% higher in the short run, according to the Budget Lab. And those prices could increase more in the long run. The report issued May 12 estimated the effects of all U.S. tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the United Kingdom, and the auto tariff relief that could apply to automakers. Right now, it's hard to judge whether we'll see a flood of price hikes at every store or shortages on the shelf. "We saw during the avian flu crisis that not all grocery stores hiked egg prices," Tedeschi said. "Some simply chose to run out of eggs. So, price rises in the end might look less painful than some feared, but that doesn't necessarily mean that consumers haven't been hurt in other ways." Consumer protection: Crackdown on hidden fees when booking hotels and buying tickets hits in time for summer Overall, we could see an average per household consumer loss of $2,800, the Budget Lab reported, as a result of higher tariffs. The price level from all 2025 tariffs rises by 1.7% in the short run. Tariffs are viewed by economists as regressive taxes. How much individual households will actually see their real incomes, or after-tax incomes, fall will vary based on their spending patterns and what tradeoffs a consumer is willing to make, such as substituting a brand that didn't face a price hike. Exactly when we'll pay higher prices on individual items will vary. Some prices on some items could go up anywhere from a week to a couple of months. "When the United States imposed tariffs on Chinese washing machines in January 2018," Tedeschi said, "consumer washing machine prices didn't rise until April that year, due to a combination of retailer inventory and supply chain lags." Hallmark surprised those who collect Keepsake ornaments by advising customers that they will pay more than the listed price in the 2025 Dream Book, which was handed out at stores in April. Prices were raised in early May. In a statement sent to the Free Press, Hallmark said: "We are committed to maintaining fair pricing across our portfolio and are fortunate to manufacture 75% of our core products in our Kansas-based manufacturing facilities, including greeting cards and gift wrap." But Hallmark acknowledged that it "made the necessary decision to adjust pricing on select imported products from our gift and ornament collections that are impacted by the current economic climate." On May 15, Walmart said it would have to start raising prices on many goods later in May and June to address higher costs associated with tariffs. Already, the company said, the price of bananas at Walmart rose to 54 cents a pound, up from 50 cents, thanks to higher tariffs. The Budget Lab analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. We all know the tariff story remains ongoing. As of May 12, the U.S. and China agreed to a temporary reduction in tariffs for 90 days, as negotiations continue. "The May 12 changes to the China rate alone reduce the negative economic impact of all 2025 tariffs to date by 40%," according to the Budget Lab. Even so, the Trump trade war has meant that U.S. consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to the estimates from the Budget Lab. Without the lower China tariffs — but with a trade deal between the U.S. and the U.K. and newly proposed auto rebates — the average effective tariff rate would have been 27.6%. Consumers could have a bit of calculating to do when it comes to how much they might be willing to buy early and how willing they might be to hold off shopping. "The problem with trying to bulk purchase items in a time of uncertainty is that many other consumers are doing it, too," Tedeschi said. "This increase in demand can itself lead to the very higher prices consumers are trying to avoid." He added that it is substantially uncertain where China tariffs in particular are going to end up over the summer. "It's easy to imagine them rising or falling from the current 30%," Tedeschi said. "That said, if there are significant tariffs on China still in place this summer, it's highly likely they will put upward pressure on apparel and electronics prices for back-to-school shopping." His advice: Don't panic buy. Take more time to research and comparison shop, including researching import content for potential large purchases like appliances and cars. And he said: "Pay attention to the news and the data; ignore the noise and the vibes." Over the next few months, experts say, consumers could experience sticker shock when they shop for a long list of items. Tariffs are not just about higher prices on many cars or trucks. Jason Miller, who keeps a close eye on inventories as an associate professor of logistics in the department of supply chain management at Michigan State University's Eli Broad College of Business, noted that there's lag between when products are imported and when they hit store shelves. But he expects that price tags on many goods will start reflecting the impact of tariffs by June and July. Consumers, he said, likely will see price hikes on clothing and apparel; footwear; toys and games; and small electrical appliances, including microwaves, toasters and mixers. Price hikes, he said, might also be expected for various household items for bathrooms, including items made of plastic; children's car seats and strollers, and some types of furniture. For items like toys, Miller said, percentage increases in the double-digit range seem probable. The same's true, he said, with car seats and strollers currently. All are items where China plays a major role in exporting goods to the United States. The Toy Association, which has more than 900 members, is urging the U.S. government to grant a reprieve from tariffs on toys imported from China to make sure toys available for the holiday season. The Toy Association wants U.S. leaders to secure "zero for zero" tariffs on toys through bilateral negotiations with trading partners. Trump famously stated: "Maybe the children will have two dolls instead of 30 dolls." And Trump added: "Maybe the two dolls will cost a couple of bucks more than they would normally." The New York Post ran a Page One cover May 1 declaring: "Skimp on the Barbie." Miller doesn't expect many supply chain snarls in the weeks ahead, as a rush of imports into the United States is expected now. "The biggest unknown now," Miller said, "is what happens with the remaining reciprocal tariffs ... at the end of the 90-day July pause." "The other unknown," Miller said, "is what happens to domestic demand for manufacturing." Regional Federal Reserve Bank manufacturing surveys showed significant weakening of new orders in the past few months, especially in April, including upward pressure on the cost of imported materials and supplies. As of May 13, a 10% tariff on goods entering the U.S. is to stay in place but, according to Reuters, U.S. officials remain in talks with several countries to lower additional tariffs imposed by Trump. The 10% tariff was imposed on nearly all countries by Trump on April 2. Consumers saw inflation hit a four-year low, as the consumer price index rose year-over-year by 2.3% in April, according to the May 13 report by the U.S. Bureau of Labor Statistics. Prices fell on some items in April, including airline tickets, used cars and trucks. Used car and truck prices were down 0.5% month over month in April, following a 0.7% drop in March. Year-over-year used vehicle prices were up 1.5% in April. Gasoline prices were down 0.1% month over month, following a 6.3% drop in March and a 1% decline in February. Gas prices were down 11.8% over 12 months through April, according to the Labor Department. PNC Chief Economist Gus Faucher noted in his report that consumers saw little indication in the April CPI report of tariffs causing higher goods prices. But he warned that tariffs are likely to drive prices and inflation up over the next few months. "Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all U.S. trading partners are much higher than they were at the beginning of 2025," Faucher said. Diane Swonk, KPMG's chief economist, noted in a report: "This could be the last benign inflation report for a while." Make no mistake, consumers and business remain extremely uncertain about what's next when it comes to tariffs. On May 8, for example, major footwear manufacturer Wolverine Worldwide stated in its earnings report that it would not provide a full-year 2025 outlook as a result of "uncertainty around tariffs and related macro-economic conditions." The company, which is based in Rockland, also then said that it is withdrawing its 2025 guidance issued on Feb. 19. Wolverine Worldwide stated in its footnotes that risk factors ahead include price increases, risks associated with foreign sourcing, tariffs, as well as economic conditions, such as inflationary pressures, employment rates and interest rates. Wolverine Worldwide shoe brands include Merrell, Saucony, Hush Puppies, Chaco and Stride Rite. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands. How much of the higher tariffs will be passed along directly to consumers remains unknown — and we don't know just yet where tariffs will end up. "The recent de-escalation with China to lower tariffs from 145% to 30% for 90 days is welcome news," according to an economic outlook issued May 13 by KPMG. "That will help to restart trade between the two countries, but it is unclear whether tariffs will rise or drop at the end of the pause." The KPMG report indicated that the Federal Reserve "is not expected to cut rates until December due to a bout of stagflation, a period of rising inflation coupled with escalating unemployment." We've not dealt with the troubling mix of a sluggish economy and high inflation at the same time since the 1970s. "Uncertainty is just off the charts," said Charles Ballard, professor of economics emeritus at Michigan State University. Even the tariffs under the 90 day pause, he said, are much more restrictive than what was in place months ago. "Trade barriers were very low when President Trump took office. He has contended again and again that other countries put up severe barriers to American exports. There is very little truth to that," Ballard said. Some cases exist, he said, such as Canadian tariffs on dairy products. "But for the most part, we had low tariffs on imports from other countries, and other countries had low tariffs on our exports." Overall, though, he said, American businesses are feeling whiplash as the expected tariffs have changed quickly in 2025. Does a company go ahead and place an order, Ballard asked, knowing that it may face a very different tariff when it is filled from what it faces now? Baby strollers, baby car seats, cellphones, laptops and toys, he said, are some of the items that face the greatest uncertainty. Shopping for back-to-school or Christmas now might be a good idea, Ballard said, if you're concerned about shortages or higher prices. "But it's very hard to predict exactly where the prices will be, because we don't know what the policy will be in the future," Ballard said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Expect a high-priced summer as tariffs hit apparel and footwear Sign in to access your portfolio
Yahoo
16-05-2025
- Business
- Yahoo
How shoppers might want to calculate the cost of higher tariffs
Skyrocketing prices might not be top of mind for many consumers this spring, especially in light of significantly lower gas prices at the pump in early May. But many economists warn that consumers should get ready to pay more for some things as soon as summer. So maybe it isn't a bad idea to start thinking about back-to-school shopping even before summer vacation begins. Some shoppers might want to keep an eye on Memorial Day sales to knock some gifts off a Christmas list. Sure, it sounds strange. But it's one more weird twist in the new economic realities associated with much higher tariffs in 2025 on many goods that consumers buy. Can we expect to see price hikes of 15% or more on shoes or a sweater? Maybe. If so, we could be talking about the kind of consumer indignation we saw when egg prices soared. Eggs are up 18% over the last four months or 49% in a year, according to Ernie Tedeschi, director of economics at The Budget Lab at Yale University. Price hikes related to tariffs are not showing up yet in many goods, like clothing, because the items aren't perishable and retailers continue to sell some "pre-tariff inventory," Tedeschi told the Detroit Free Press. But consumers can expect big price spikes to hit clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a nonpartisan research center that provides analysis of federal policy proposals for the U.S. economy. Shoe prices are expected to be 15% higher and apparel prices are expected to be 14% higher in the short run, according to the Budget Lab. And those prices could increase more in the long run. The report issued May 12 estimated the effects of all U.S. tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the United Kingdom, and the auto tariff relief that could apply to automakers. Right now, it's hard to judge whether we'll see a flood of price hikes at every store or shortages on the shelf. "We saw during the avian flu crisis that not all grocery stores hiked egg prices," Tedeschi said. "Some simply chose to run out of eggs. So, price rises in the end might look less painful than some feared, but that doesn't necessarily mean that consumers haven't been hurt in other ways." Overall, we could see an average per household consumer loss of $2,800, the Budget Lab reported, as a result of higher tariffs. The price level from all 2025 tariffs rises by 1.7% in the short run. Tariffs are viewed by economists as regressive taxes. How much individual households will actually see their real incomes, or after-tax incomes, fall will vary based on their spending patterns and what tradeoffs a consumer is willing to make, such as substituting a brand that didn't face a price hike. Exactly when we'll pay higher prices on individual items will vary. Some prices on some items could go up anywhere from a week to a couple of months. "When the United States imposed tariffs on Chinese washing machines in January 2018," Tedeschi said, "consumer washing machine prices didn't rise until April that year, due to a combination of retailer inventory and supply chain lags." Hallmark surprised those who collect Keepsake ornaments by advising customers that they will pay more than the listed price in the 2025 Dream Book, which was handed out at stores in April. Prices were raised in early May. In a statement sent to the Free Press, Hallmark said: "We are committed to maintaining fair pricing across our portfolio and are fortunate to manufacture 75% of our core products in our Kansas-based manufacturing facilities, including greeting cards and gift wrap." But Hallmark acknowledged that it "made the necessary decision to adjust pricing on select imported products from our gift and ornament collections that are impacted by the current economic climate." On May 15, Walmart said it would have to start raising prices on many goods later in May and June to address higher costs associated with tariffs. Already, the company said, the price of bananas at Walmart rose to 54 cents a pound, up from 50 cents, thanks to higher tariffs. The Budget Lab analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. We all know the tariff story remains ongoing. As of May 12, the U.S. and China agreed to a temporary reduction in tariffs for 90 days, as negotiations continue. "The May 12 changes to the China rate alone reduce the negative economic impact of all 2025 tariffs to date by 40%," according to the Budget Lab. Even so, the Trump trade war has meant that U.S. consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to the estimates from the Budget Lab. Without the lower China tariffs — but with a trade deal between the U.S. and the U.K. and newly proposed auto rebates — the average effective tariff rate would have been 27.6%. Consumers could have a bit of calculating to do when it comes to how much they might be willing to buy early and how willing they might be to hold off shopping. "The problem with trying to bulk purchase items in a time of uncertainty is that many other consumers are doing it, too," Tedeschi said. "This increase in demand can itself lead to the very higher prices consumers are trying to avoid." He added that it is substantially uncertain where China tariffs in particular are going to end up over the summer. "It's easy to imagine them rising or falling from the current 30%," Tedeschi said. "That said, if there are significant tariffs on China still in place this summer, it's highly likely they will put upward pressure on apparel and electronics prices for back-to-school shopping." His advice: Don't panic buy. Take more time to research and comparison shop, including researching import content for potential large purchases like appliances and cars. And he said: "Pay attention to the news and the data; ignore the noise and the vibes." More: Student loan debt collection restarts: How to avoid garnished wages, tax refund seizures More: How tariffs are impacting a Detroit scrapper and the metals precious to US manufacturing Over the next few months, experts say, consumers could experience sticker shock when they shop for a long list of items. Tariffs are not just about higher prices on many cars or trucks. Jason Miller, who keeps a close eye on inventories as an associate professor of logistics in the department of supply chain management at Michigan State University's Eli Broad College of Business, noted that there's lag between when products are imported and when they hit store shelves. But he expects that price tags on many goods will start reflecting the impact of tariffs by June and July. Consumers, he said, likely will see price hikes on clothing and apparel; footwear; toys and games; and small electrical appliances, including microwaves, toasters and mixers. Price hikes, he said, might also be expected for various household items for bathrooms, including items made of plastic; children's car seats and strollers, and some types of furniture. For items like toys, Miller said, percentage increases in the double-digit range seem probable. The same's true, he said, with car seats and strollers currently. All are items where China plays a major role in exporting goods to the United States. The Toy Association, which has more than 900 members, is urging the U.S. government to grant a reprieve from tariffs on toys imported from China to make sure toys available for the holiday season. The Toy Association wants U.S. leaders to secure "zero for zero" tariffs on toys through bilateral negotiations with trading partners. Trump famously stated: "Maybe the children will have two dolls instead of 30 dolls." And Trump added: "Maybe the two dolls will cost a couple of bucks more than they would normally." The New York Post ran a Page One cover May 1 declaring: "Skimp on the Barbie." Miller doesn't expect many supply chain snarls in the weeks ahead, as a rush of imports into the United States is expected now. "The biggest unknown now," Miller said, "is what happens with the remaining reciprocal tariffs ... at the end of the 90-day July pause." "The other unknown," Miller said, "is what happens to domestic demand for manufacturing." Regional Federal Reserve Bank manufacturing surveys showed significant weakening of new orders in the past few months, especially in April, including upward pressure on the cost of imported materials and supplies. As of May 13, a 10% tariff on goods entering the U.S. is to stay in place but, according to Reuters, U.S. officials remain in talks with several countries to lower additional tariffs imposed by Trump. The 10% tariff was imposed on nearly all countries by Trump on April 2. Consumers saw inflation hit a four-year low, as the consumer price index rose year-over-year by 2.3% in April, according to the May 13 report by the U.S. Bureau of Labor Statistics. Prices fell on some items in April, including airline tickets, used cars and trucks. Used car and truck prices were down 0.5% month over month in April, following a 0.7% drop in March. Year-over-year used vehicle prices were up 1.5% in April. Gasoline prices were down 0.1% month over month, following a 6.3% drop in March and a 1% decline in February. Gas prices were down 11.8% over 12 months through April, according to the Labor Department. PNC Chief Economist Gus Faucher noted in his report that consumers saw little indication in the April CPI report of tariffs causing higher goods prices. But he warned that tariffs are likely to drive prices and inflation up over the next few months. "Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all U.S. trading partners are much higher than they were at the beginning of 2025," Faucher said. Diane Swonk, KPMG's chief economist, noted in a report: "This could be the last benign inflation report for a while." Make no mistake, consumers and business remain extremely uncertain about what's next when it comes to tariffs. On May 8, for example, major footwear manufacturer Wolverine Worldwide stated in its earnings report that it would not provide a full-year 2025 outlook as a result of "uncertainty around tariffs and related macro-economic conditions." The company, which is based in Rockland, also then said that it is withdrawing its 2025 guidance issued on Feb. 19. Wolverine Worldwide stated in its footnotes that risk factors ahead include price increases, risks associated with foreign sourcing, tariffs, as well as economic conditions, such as inflationary pressures, employment rates and interest rates. Wolverine Worldwide shoe brands include Merrell, Saucony, Hush Puppies, Chaco and Stride Rite. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands. How much of the higher tariffs will be passed along directly to consumers remains unknown — and we don't know just yet where tariffs will end up. "The recent de-escalation with China to lower tariffs from 145% to 30% for 90 days is welcome news," according to an economic outlook issued May 13 by KPMG. "That will help to restart trade between the two countries, but it is unclear whether tariffs will rise or drop at the end of the pause." The KPMG report indicated that the Federal Reserve "is not expected to cut rates until December due to a bout of stagflation, a period of rising inflation coupled with escalating unemployment." We've not dealt with the troubling mix of a sluggish economy and high inflation at the same time since the 1970s. "Uncertainty is just off the charts," said Charles Ballard, professor of economics emeritus at Michigan State University. Even the tariffs under the 90 day pause, he said, are much more restrictive than what was in place months ago. "Trade barriers were very low when President Trump took office. He has contended again and again that other countries put up severe barriers to American exports. There is very little truth to that," Ballard said. Some cases exist, he said, such as Canadian tariffs on dairy products. "But for the most part, we had low tariffs on imports from other countries, and other countries had low tariffs on our exports." Overall, though, he said, American businesses are feeling whiplash as the expected tariffs have changed quickly in 2025. Does a company go ahead and place an order, Ballard asked, knowing that it may face a very different tariff when it is filled from what it faces now? Baby strollers, baby car seats, cellphones, laptops and toys, he said, are some of the items that face the greatest uncertainty. Shopping for back-to-school or Christmas now might be a good idea, Ballard said, if you're concerned about shortages or higher prices. "But it's very hard to predict exactly where the prices will be, because we don't know what the policy will be in the future," Ballard said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Prices to go up on shoes, clothing, toys and more as tariffs hit Sign in to access your portfolio
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14-05-2025
- Business
- Yahoo
4 Ways the Middle Class Can ‘Tariff-Proof' Their Wealth
Panic, dread and confusion are running high as President Donald Trump made good on his promise to impose tariffs on imported goods. Eighteen countries and the European Union, which comprises 27 countries, are paying a minimum of 10% in tariffs, but those classified by Trump as the 'worst offenders,' which is most of them, are paying more. Find Out: Read Next: On April 5, 2025, the 10% baseline tariffs went into effect on the following countries: United Kingdom, Singapore, Brazil, Australia, New Zealand, Turkey, Colombia, Argentina, El Salvador, United Arab Emirates and Saudi Arabia. Custom tariffs for 'worst offenders' went into effect on April 9. These groups pay an elevated rate: European Union: 20%; Vietnam: 46%; Thailand: 36%; Japan: 24%; Cambodia: 49%; South Africa: 30%; Taiwan: 32% and China: 104%. Americans of all wealth statuses are concerned about the impact of tariffs on the prices of various goods, but members of the middle class and below have the most reason to be. A recent study by The Budget Lab found that the tariffs enacted on April 9 would cost an average family an extra $4,700 a year — an amount of money that many households cannot afford to part with. How can the middle class 'tariff-proof' their wealth? Let's see what financial experts recommended. The first thing you need to do to protect your wealth amid tariffs is to prioritize essential expenses — even more so than you do now. You should also ensure your emergency fund is well funded (six months of living expenses set aside). 'Focusing on necessities like housing, food, transportation and healthcare can help maintain stability when prices start to climb,' said Einat Steklov, co-founder and CEO at Kashable. 'It's also wise to set aside a small 'rainy day' amount whenever possible. Even a modest emergency fund can act as a buffer when costs exceed what was originally budgeted, helping to avoid high-interest borrowing or delayed bills.' Learn More: You're probably no stranger to budgeting — much of which hinges on being able to predict as many incoming expenses as possible. Right now, we're in a little bit of a limbo as we haven't yet seen just how profoundly we'll feel the impact of tariffs. We know costs will go up on many everyday items, and we know some retailers are being very upfront about raising prices, but we don't have 100% transparency. Though we can't accurately predict how our budgets will be hit by tariffs, we can respond by analyzing our budgets each and every month. 'Close your books by the 10th of each month,' said Jay Jung, president and founder at Embarc Advisors. 'Regularly compare budget versus actuals. Most importantly, have a strategic discussion on beats and misses. Build a detailed budget, but don't stop there — conduct a monthly budget versus actual analyses to stay informed and adapt quickly.' Tariffs can contribute to inflation, as businesses often pass the extra costs they're paying on imported goods onto consumers. Help your money hedge against inflation by placing any liquid savings, such as cash set aside for emergencies, into a high-yield savings account (HYSA). 'Move your money to a high-yield savings account. Right now, you should be looking for accounts paying at least 3% to keep up with rising costs,' said Tim Newell, CEO and founder at GreenFi. 'Leaving your savings in a low-interest account at a big bank could cost you hundreds or even thousands over the next few years.' It's important to diversify your investment portfolio no matter the economic climate, but right now, with the tariffs triggering major stock market volatility, it's more important than ever. Take a global approach. 'Since the president took office a few months ago, international stocks have outperformed American stocks by 15%,' said Brian Page, AFC candidate, Fair Play Certified, CPFFE, founder at Modern Husbands. 'Nobody knows whether this trend will continue, which is the point of diversification.' Page recommended including low-cost global index funds in your retirement portfolio 'to help you maintain exposure without overcommitting to any one economy.' More From GOBankingRates Here's How Much Cars Made in the US Cost Compared to Mexico, Canada and China 6 Hybrid Vehicles To Stay Away From in Retirement 4 Grocery Items To Buy Now Before Tariffs Raise Prices This Summer 4 Affordable Car Brands You Won't Regret Buying in 2025 Sources Einat Steklov, Kashable Jay Jung, Embarc Advisors Tim Newell, GreenFi Brian Page, Modern Husbands This article originally appeared on 4 Ways the Middle Class Can 'Tariff-Proof' Their Wealth Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
