Josh Balk and Paul Wiseman, Associated Press
WASHINGTON (AP) — As President Donald Trump prepares to announce new tariff increases, the costs of his policy are beginning to focus on domestic manufacturing sectors that rely on global supply chains, with new analysis suggesting factory costs could increase by around 2% to 4.5%.
“There will be cash squeezes for many of these companies,” said Chris Bangart Droun, a researcher at the Washington Equitor Growth Center, who conducted the analysis. Bangartdroun said that a seemingly small change in profit margins in slim factories could “contribute to wage stagnation, if not layoffs or plant closures, if not layoffs or plant closures,” if costs are not acceptable.
The analysis released Tuesday not only shows that his negotiation style will set backwards other countries, but also points to the challenges Trump may face as a broader political and economic victory, as well as a broader political and economic victory. The success of Trump’s policy depends on whether everyday Americans will eventually become wealthy and factory towns will experience revival. The outside goal of the economist says his Republican administration will rarely meet tariffs.
Trump has announced new frameworks with the European Union, Japan, the Philippines, Indonesia and the UK. He is ready to collect tariffs on goods from dozens of countries starting on Friday in the range of 15% to 50%.
The US stock market has shown that it hopes for stability in the future by easing tariffs not as high as Trump initially threatened in April. Trump helps to boost domestic factory work while reducing budget deficits, helping to boost domestic factory work while reducing risks for all prices.
“We’ve cleared up inflation,” Trump said last Friday before riding Marine One on his way to Scotland.
However, if tariffs flow more fully through the global economy, they could bounce back in the form of higher prices and slower growth.
A June survey by the Atlanta Federal Reserve suggests that businesses, on average, pass half their tariff costs to US consumers at a higher price. Labor Bureau data shows that America has lost 14,000 manufacturing jobs after Trump rolled out tariffs in April.
New tariffs are in place, the factory will be charged new costs
Washington’s Center for Equitable Growth Analysis shows how Trump’s commitment to tariffs holds the potential economic and political costs of his agenda. In swing states in Michigan and Wisconsin, more than one in five jobs are key sectors of manufacturing, construction, mining, oil drilling and maintenance, with high exposure to import taxes.
The artificial intelligence sector last week touted its economy’s future reliance on imports. With over 20% of the inputs in computer and electronics manufacturing are imported, tariffs could ultimately expand the massive multi-dollar price tag to build US technology.
The White House says it claims that American companies will access new markets for the trade framework, which will ultimately make profits.
“The ‘Made in USA’ label is set to resume global control under President Trump,” said White House spokesman Kush Desai.
There is still a lot of uncertainty, but the global economy faces new sacrifices
There are limitations to the analysis. Trump’s tariff rates are a moving target, and the analysis only considers additional costs, not how those costs are absorbed among foreign producers, domestic manufacturers and consumers. Additionally, the legal basis for tariffs as an “urgent” act will take place Thursday before the US Court of Appeals.
Treasury Secretary Scott Bessent said in an interview last week about the Fox Business Network’s “Kudlow” show that he essentially embraced tariffs to maintain access to the US market. “Everyone is willing to make sacrifices,” he said.
But what Bescent didn’t say is that US manufacturers are also paying a lot of their tolls.
“We’re squeezed in every aspect,” said Justin Johnson, president of Jordan manufacturing in Belding, Michigan, northeast of Grand Rapids. His grandfather founded the company in 1949.
The company, which manufactures parts used by Amazon Warehouses, automotive companies and aerospace companies, has increased the prices of its major raw materials (steel coils) by 5% to 10% this year.
Trump imposes 50% tariffs on imported steel and aluminum. Jordan Manufacturing does not purchase foreign steel. But by crippling foreign competition, Trump’s tariffs have allowed domestic American steelmakers to raise prices.
Johnson doesn’t blame them. “In those circumstances, there is no red blood cell capitalist who is not going to raise his price,” he said.
Trump says there is no inflation from tariffs, but businesses see higher prices
The Trump White House claims that inflation has not emerged in the economy, and published a report through the Economic Adviser Council this month, saying prices for imported goods fell between December last year and this May. “These findings contradict the claim that tariffs or fear of tariffs lead to accelerated inflation,” the report concludes.
Ernie Tedesci, director of economics at Yale’s Budget Institute, said it was comparing import prices trends in the past, with CEA’s own numbers indicating “import prices have been accelerating in recent months.”
The latest estimate from Yale’s budget lab is that tariffs will make the average household $2,400 cheaper than otherwise.
Keep the economy on the edge of the knife
Josh Smith, founder and president of Montana Knife Co., called himself a Trump voter, said he believes tariffs on foreign steel and other goods are threatening his business.
For example, Smith ordered a $515,000 machine from Germany and grinded the knife blade to the sharp edge. Trump had levied a 10% tax on products from the EU, which are set to rise to 15% under the trade framework it announced on Sunday. So Trump’s tax on the machine is $77,250. That’s enough for Smith to hire entry-level workers.
Smith was happy to purchase a bevel grinding machine from an American supplier. But there’s nothing. “There are only two companies in the world that make them. They are both in Germany,” Smith said.
Next is imported steel, which Trump taxes at 50%. Until this year, Montana Knife purchased the necessary powdered steel from the crucible industry in Syracuse, New York. However, Crucible declared bankruptcy last December, with the assets being purchased by Swedish company Erasteel, and production moved to Sweden.
Smith defeated the tariffs by purchasing a year’s worth of steel in advance. However, from 2026, the specialized steel he imports from Sweden has been set to take a hit at 50% duty.
“The average American isn’t sitting in my position. I looked at the numbers I was in and said, ‘Hey, I can’t hire these few people because I might have to pay this tariff on this steel,” he said. ” he said. “I want to buy more equipment and hire more people. That’s what I want to do.”
Original issue: July 29, 2025, 8:52am EDT
