Consumers could get hit by Trump’s tariffs

Wendy Howard is worried.

A steady uptick in prices and in her cost of living already led the Chicago native to abandon retirement to reboot her teaching career. She doesn’t eat out anymore and is concerned that her holiday shopping could be curtailed if the Trump administration’s trade war with China pushes prices even higher.

“My rent increased astronomically, gas prices, everything,” said Howard, who is in her 50s and lives in Pasadena, Calif. “I’m a retired teacher, I’m going to have to take another teaching job … so that I can hopes of retiring one day.”

Howard’s worries are legitimate, although not immediate, economists say.

Prices for everything from housing to car insurance to eating out are on the rise. What’s more, economists predict consumer prices will climb higher if the Trump administration’s efforts to impose steep tariffs on a wide range of imported goods succeed. During an interview with CNBC, President Donald Trump suggested he’d be willing to assess tariffs on virtually every product imported from China.

“If the price of your auto parts goes up, it will eventually get passed on to consumers, but the question is, how quickly?” said Philip Levy, a senior fellow at the Chicago Council on Global Affairs and adjunct professor at Northwestern University’s Kellogg School of Management.

Chicago-area prices rose 2.2 percent in 12 months that ended in June, and have been rising steadily since early 2017. Among the biggest gainers over the 12month period were food away from home, up 3.6 percent; alcoholic beverages, up 3.9 percent; and gasoline, up 26.8 percent.

Nationally, consumer prices rose 2.9 percent in the 12 months that ended in June, the largest increase in more than six years.

Also increasing is the number of hours workers are putting in each week, according to Katheryn Russ, an economist at the University of California at Davis and former senior economist at the Council of Economic Advisers during the Obama administration. So if workers are taking home more money, Russ said, it’s because they are working more hours.

But inflation is chipping away at those wage gains.

Experts warn consumers not to overextend themselves financially. “I wouldn’t do any purchasing I wasn’t planning to,” said Diane Swonk, chief economist at Grant Thornton.

Some consumers already are getting squeezed. A 20 percent tariff on imported Canadian lumber, implemented last year, has upped the cost of new single-family homes by $9,000, according to the National Association of Home Builders.

Tariffs of 20 to 50 percent on washing machines from China, South Korea and Mexico have increased the price of foreign-made washers by $50 to $90, retailers say.

Also trickling down to consumers is a 10 percent tariff on imported aluminum and 25 percent tariff on imported steel, Russ said. The price of U.S.-made kegs for beer is up, as is that of canned sodas and food.