Christopher Lugerber and Anne Die Inogio, AP Business Writer
WASHINGTON (AP) — President Donald Trump’s new tariffs are threatening to push prices for clothing, mobile phones, furniture and many other products in the coming months, potentially ending an era of cheap goods that Americans enjoyed for about a quarter of a century before the pandemic.
In return, White House officials hope that import taxes will create higher paying manufacturing jobs by bringing production back to the US. It is a politically dangerous trade-off that can take years to come to fruition, and it has to overcome tall barriers such as automation in most modern factories.
Even after Trump’s U-turn suspended a sudden new tariff on around 60 countries for 90 days on Wednesday, the average US job remains much higher than it was a few months ago.
Trump imposes a 10% tariff on all imports, but goods from China, the third largest import source in the United States, face a large 145% obligation. There is also a 25% tax on imports of steel, aluminum, cars and about half of the goods in Canada and Mexico.
As a result, US tariffs have skyrocketed from under 3% before Trump’s inauguration, economists have calculated it is at the highest level since at least the 1940s.
Aerial view of the Xiasha container terminal in the canal of Hangzhou, Z Jiang Province, eastern China (Chinatopix via AP)
Foreigners will shop fashion accessories at Yiwu International Trade Market in Yiwu, Z Jiang Province, East China on Thursday, April 10, 2025 (AP Photo/ng Han Guan)
Halloween costume vendors will wait for customers on Thursday, April 10, 2025 at the Yiwu International Trade Market in Yiwu, Zhijiang Province, eastern China.
Aerial view of a new car waiting for shipment on the pier of a “roll-on/roll-off” ship in Yantai city in Shandong Province, eastern China (Chinatopix via AP)
Aerial view of imported iron ore in the port of Yantai city in Shandong province, eastern China (Chinatopix via AP) China
Boxes of party supplies imported from China are stacked outside a store in the Toys district of Los Angeles on Wednesday, April 9, 2025 (AP Photo/Jae C. Hong)
People pass through an electronic board showing the trading index of Shanghai Stock Exchange at a Beijing brokerage on Tuesday, April 8, 2025 (AP Photo/Andy Wong)
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Aerial view of the Xiasha container terminal in the canal of Hangzhou, Z Jiang Province, eastern China (Chinatopix via AP)
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Globalization’s impact on price
If they remain as is, such high obligations would reverse decades of globalization that would help reduce costs for American shoppers.
Other trends have also reduced prices, particularly in electronic devices such as televisions and other factors. But imports will help keep prices down, economists say, partly due to reduced labor costs overseas and increased competition in the US market, making American companies more efficient.
“We are pleased to announce that we are a sought after business,” said Scott Lincicom, trade analyst at the Libertarian Cato Institute. “If you enter the more restricted supply side, you’re likely to see something more expensive,” Lincicom said.
Bank of America estimates that new missions could raise car prices to an average of $4,500, even assuming that automakers will absorb some of the impact of tariffs. Such an increase has left the average price for a new car at a painful $48,000 following a sharp price hike over the past few years.
Shiphero LLC CEO Aaron Rubin said that merchants provide software to help merchants book shipments and track order delivery.
Shiphero’s data earns millions of products, equivalent to approximately 1% of all US e-commerce sales. Rubin said prices rose 3.9% on Sunday and Monday on a variety of items compared to the week before Trump announced more tariffs.
A long winning streak at a low price
After the defeat of double-digit inflation in the 1970s in the early 1980s, inflation regularly surpassed 4% per year until the mid-1990s, when freer trade and globalization began to intensify. From 1995 to 2020, the average was below 2.2%.
American shoppers benefited. According to government data, the average cost of clothing fell by 8% from 1995 to 2020. The cost of the furniture had almost not changed. The average shoe price has risen by just 10%.
Trump administration officials have sometimes admitted the prospect of rising prices from tariffs.
In a speech last month to the New York Economic Club, the Treasury Department said, “Access to cheap products is not the essence of America’s dream.”
The administration’s willingness to downplay the appeal of cheap products is a dangerous move that comes after the worst inflationary spike of 40 years from 2021 to 2023.
About half of Trump’s voters said high prices for gas, groceries and other products were the most important factors in the vote, according to the Associated Press Voting, a national survey of voters last November. Another 43% of Trump voters said it was a key factor, even if it wasn’t the most important consideration.
Some consumers say they are willing to pay more for US products.
Alisha Sholtis, 38, a nurse-turned-social media influencer, has done a ton of shopping at Temu, a first-fashion e-commerce website founded by China, scooping up polyester tops and dresses for $5-25, grabbing cheap electronics and toys. Temu’s products face huge new tariffs.
But Soltis, who lives in Davison, Michigan, said he was tired of clothes that fell apart after one wash and a easily broken toy. She’s currently shopping elsewhere.
She praises Trump’s goal of bringing some manufacturing back to the US as she feels the move will lead to better quality. And she said she didn’t mind paying a higher price as a result.
“I would buy fewer higher quality ones,” she said.
Trump’s top economic adviser Kevin Hassett confirmed on Sunday that “prices could rise somewhat” from the president’s tariffs.
However, he noted that there was a trade-off from globalization. “I got cheap products from the grocery store, but then I’ve had less work,” he said on ABC, “this week.”
However, many industries will find it difficult to bring much production back to the US in the face of tariffs, especially as the scope of their duties changes frequently. Because China’s goods obligations are much higher than in other parts of the world, many Chinese products are likely to be routed through other countries such as Vietnam and pay lower obligations, economists say.
Shannon Williams, CEO of the Home Furnishings Association, a furniture trade group, said it could take years to establish it in the US, considering the US unemployment rate is 4.2%, and it is not clear whether there are enough workers either, and it could take years to set up in the US.
And the most innovative furniture manufacturer in the United States is using technology to reduce labor needs. “They’ve gone through that and are fully automated their assembly lines,” she said.
China is the US’s third largest trading partner, and the US imported over $60 billion in iPhones and other mobile phones from China last year.
China exported 1.2 billion pairs of shoes to the US, according to American footwear distributors and retailers. Approximately 26% of our clothing was imported from China in 2023, one study was found, and about 80% of our toys were found.
Williams said furniture prices are likely not going to rise anytime soon, as most companies are currently imported from other Asian countries such as Vietnam and Malaysia.
But “globalization definitely helped us reduce costs,” she said. “There’s a reason you can buy a $699 sofa in 1985 and buy a $699 sofa today.”
d’Hynenzio was reported from New York. Associated Press Writer Linley Sanders also contributed to this report.
Original issue: April 10th, 2025, 3:44pm EDT
