“In the United States, we can’t grow much coffee. We import about US$8,500 million a year. The tariffs will amount to at least US$1,250 million. That’s a 15% tax increase on your morning coffee.” That message, posted Thursday by U.S. Chamber of Commerce policy chief Neil Bradley on social media X.
Shows the sentiment of many in the U.S. private sector in the face of tariffs announced a day earlier by Trump for nearly every country in the world. The tariff is a fee that a country charges for importing a product from another country. For example, if a U.S. company wants to import $100 worth of lumber and the country where it comes from has a 10% tariff assigned by the U.S. government, the company must pay $10 at customs
Thus, the tariff is paid by the U.S. importing company. Which will then have to decide whether to transfer that cost to the price that consumers pay for their products.
That is why most analysts have predicted that Trump’s decision to impose tariffs on foreign trade will lead to U.S. consumers having to pay more for the imported products they buy, and that this will generate inflation.
But from the White House they see it differently.
Trump says that other countries must pay what he called “reciprocal tariffs” to balance trade relations that he considers unfair and points out that at most there may be slight negative consequences. With the counterpart that more jobs will be generated in his country’s industries.
What does the U.S. government say?
Trump had already resorted to tariffs in his first term (2017-2021) in his trade war with China.
Then, he said phrases such as “billions of dollars are entering the coffers of the United States due to the tariffs we are charging China” and “we are not paying the tariffs; China is paying the tariffs.”
Many economists soon replied, reminding him that the tariffs would be paid by U.S. companies that import Chinese products.
It also imposed tariffs on products from its North American Free Trade Agreement (NAFTA) partners, Mexico and Canada, although a significant part was later eliminated after signing a new agreement, known as USMCA.
“Tariffs are aimed at making America rich and great again,” Trump said in March of this year in a speech to Congress.
“And it’s happening. And it will happen pretty quickly. There will be a little disruption. But we’re fine with that. It won’t be much,” he added, without specifying how they will negatively affect them.
Days later, U.S. Treasury Secretary Scott Bessent told the Economic Club of New York that tariffs could have an impact on prices, albeit limited.
“Can tariffs have a one-time price adjustment? Yes (…),” he said, but “nothing is more transitory than tariffs if it is a single price adjustment.”
“And for those who say, ‘oh, tariffs are a tax, they’re inflationary,’ then they’re saying taxes are inflationary, something that I like to challenge a lot of my Democratic friends on,” he added.
Bessent said that he is not worried that this will generate inflation and that “Access to cheap goods is not the essence of the American dream.” “The American dream is based on the concept that any citizen can achieve prosperity, social advancement and economic security,” he stressed.
Government advisers said that only a quarter of the tariff is passed on to prices, according to an official document citing a Harvard Business School study titled “Border and Store Tariff Pass-Through: Evidence for U.S. Trade Policy,” published in 2021.
Federal Reserve Chairman Jerome Powell said in mid-March that the country was getting closer to having inflation under control — which as of February stood at 2.8% annually — but that, “with the arrival of tariff inflation,” its reduction “may be delayed.”
He insisted on the issue and pointed out that avoiding “persistent effects” of tariffs on inflation will depend on “how long it takes for them to fully pass to prices.” “Our obligation is … to make sure that a one-time increase in the price level does not become a permanent inflation problem,” he said, assuming that the new tariff rate will be passed on to the consumer.
What does the U.S. business sector think? USA?
Logically, companies don’t want to lose money. If the exporter abroad decreases the prices at which he sells—either because his country’s currency is devalued against the dollar or because he absorbs the cost of tariffs so that the product reaches the importer in the U.S. at the same price—nothing changes.
But if that doesn’t happen, U.S. companies have a decision to make. “What we’ve heard from companies of all sizes, in all industries, across the country, is that these broad tariffs are a tax increase that will raise prices for American consumers and hurt the economy,” said Neil Bradley of the U.S. Chamber of Commerce.
“We anticipate that suppliers of all of our inventory will pass on some level of tariff costs to retailers. Making price increases for U.S. consumers very likely,” Barry told investors weeks ago. An alternative for importers is to look for other suppliers, buy from a country with fewer tariffs, or switch to cheaper similar products, so they don’t have to increase consumer prices. But that’s not always possible.
In the automotive sector, Volkswagen has already announced that it will charge an “import tax” in the U.S. starting at the end of April, according to U.S. media. According to an estimate by the Peterson Institute for International Economics published in May 2024, universal tariffs of 10% and 60% for China would cost the average American household about $1,700 a year.
In March of this year, one of the authors of the research, the Argentine Alberto Cavallo, referred to this work on social network X and wrote, “If tariffs persist and businesses can no longer absorb the costs, higher prices for the consumer are likely to result” and the transfer will be virtually complete.
With information from Felipe Llambías, BBC News Mundo
Translated by Aliani Rojas Fernández
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