President Donald Trump’s plan to hit imports from foreign countries with sweeping reciprocal tariffs could nearly double U.S. inflation if fully imposed, a study said, intensifying a recent resurgence in consumer price increases.
“My view is it would mean a real shock to the American economy,” said Gary Hufbauer, an economist and senior fellow at the Peterson Institute for International Economics. “Quite a bit of inflation.”
That’s a worst-case scenario that may be substantially mitigated. The Trump administration has acknowledged the fees at least partly serve as a negotiating tactic aimed at prodding foreign countries to lower their import charges on the U.S. A White House official also said countries that have the largest trade deficits with the U.S. will be examined first.
And American retailers and manufacturers likely would absorb at least some of the duties instead of passing them along to consumers through higher prices, economists said.
Still, the tariffs would be so far-reaching – intended to match foreign taxes, subsidies and other trade barriers – that imposing even a significant portion of them could notably boost consumer prices, especially if tacked onto the flurry of other import levies Trump has announced.
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“U.S. reciprocal tariffs will be a big deal,” Capital Economics titled a note to clients on Friday.
What is meant by reciprocal tariffs?
Under the plan, the government would slap imports…
