What Trump's sweeping tariffs mean for the US economy and you
President Donald Trump's sweeping new tariffs will raise the likelihood of a recession and hike prices for an array of goods, including coffee, bananas, laptops and toys, multiple analysts told ABC News.
The wide-reaching set of levies will slap a 10% tax on all imported products, and place additional duties on items from some of the largest U.S. trading partners, including China and the European Union.
The move amounts to one of the biggest tax increases in modern U.S. history, disrupting the global supply chains that underpin a major swathe of the nation's economic activity, analysts said.
"This policy delivers a huge, huge shock to the economy," Jason Miller, a professor of supply chain management at Michigan State University, told ABC News.
Here's what to know about what Trump's new tariffs mean for the U.S. economy and you:
Will Trump's tariffs raise prices?
The far-reaching tariffs announced on Wednesday will drive up prices for many goods, experts said.
Since tariffs saddle importers with higher costs, the firms typically pass along a share of the tax burden to consumers in the form of higher prices.
The universal 10% tariff will likely increase prices for just about every imported good, as well as domestically assembled items that rely on foreign parts, experts said.
The across-the-board tariff will be added to a set of duties on about 60 countries that levy U.S. goods. Trump described such duties as "reciprocal tariffs," though he noted that the U.S. would impose tariffs at half the level of the trade barriers slapped on U.S. products.
Those targeted tariffs include a 34% duty on China, a 46% tariff on Vietnam and a 37% tariff on Bangladesh – all of which make up a key source of imported electronics and clothing.
"Prices will go up for smartphones, computers and TV – pretty much any electronic you can think of," Rob Handfield, professor of operations and supply chain management at North Carolina State University, told ABC News.
Price hikes will also hit grocery items like coffee from Vietnam, bananas from Guatemala and avocados from Mexico, experts said.As a result of the tariffs, inflation could nearly double this year from a current level of 2.8% to 5%, investment firm UBS said in a note to clients.
"The overall impact is likely to be severe to the consumer," Seema Shah, chief global strategist at Principal Asset Management, told ABC News in a statement. "Households should expect higher prices across a wide range of everyday items."
Oil, gas and pharmaceuticals are among the products excluded from Trump's tariffs, meaning such goods may avoid price hikes.
When will prices go up as a result of the tariffs?
Price increases will hit perishable food items days after the tariffs take effect, while other goods will show price hikes within a matter of weeks or months, depending on when current inventory runs dry, some experts said.
The universal 10% tariff is set to take effect on the morning of April 5, and the reciprocal tariffs will hit products on the morning of April 9, White House officials said.
"The first thing people will notice is that certain grocery prices will go up," Kyle Handley, a professor of economics at the University of California, San Diego, told ABC News. "You can't store avocados or bananas – and we don't grow those in the U.S."
"We'll start to see price increases this week," Handfield added.
Prices of other goods will rise as firms sell through current inventory and replace it with imported products, experts said.
Auto prices could rise within a matter of weeks, experts previously told ABC News. Ultimately, prices of other imported goods will go up over the course of this year as importers adapt to higher costs and pass them along to consumers, some experts said.
Will Trump's tariffs tip the economy into a recession?
Trump's sweeping tariffs increase the likelihood of a U.S. recession, analysts told ABC News.
Potential wide-ranging price increases will likely deter shoppers, slashing consumer spending and hammering firms that rely on the purchasing power of U.S. buyers.
Consumer spending accounts for about two-thirds of U.S. economic activity. In March, consumer confidence dropped to its lowest level since 2021, according to a survey conducted by The Conference Board.
"A lot of U.S. consumers will hold back and if everybody does that at the same time, that's how you get into a recession," Handley said.
Meanwhile, if many firms raise prices, they may become less competitive as they may struggle to retain customers. In turn, business performance may suffer, prompting companies to freeze or reduce investment.
"It's a recipe for more inflation and less customer demand," Miller said.
After Trump's announcement on Wednesday, some Wall Street firms voiced warnings about a possible recession.
"These policies, if sustained, would likely push the US and global economy into recession this year," J.P. Morgan said in a note to clients after the tariff announcement.
"Recession risks will likely rise," Deutsche Bank said.
