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CNET
22 minutes ago
- CNET
Trump's Tariffs Explained: What You Need to Know as Inflation Picks Up Again
The off-again, on-again nature of US tariffs in 2025 has many consumers anxious about the future. James Martin/CNET The One Big Beautiful Bill might've made it across the finish line but tariffs still remain the dominant focus of President Donald Trump's economic agenda. This is especially true as the US Labor Department announced recently that consumer prices rose 2.7% in June, the highest spike since February, and a report from CNBC found that prices at Walmart, one of the largest retailers in the US, have steadily gone up since Trump's tariffs entered the conversation. After unleashing market chaos on April 2 ("Liberation Day") when he unveiled a laundry list of heavy tariffs for countries around the world, they were paused for 90 days after the stock market dramatically tumbled. That 90-day pause was supposed to end earlier this month but have been been extended again through Aug. 1. More recently, the administration hiked tariffs against Canada to 35% and threatened Brazil with a 50% rate. Amid the uncertainties and upheavals, Trump has barreled forward with his plans, including doubling the tariffs on steel and aluminum imports and announcing a new plan to increase the rate for China to 55%. He also hyped up a trade deal on July 2 that leaves Vietnam's import tax rate at a historically high 20%. The sweeping tariff initiative will likely affect your cost of living, which we know from our surveys is something you're worried about. That all came after Trump's push hit its biggest roadblock yet, when the US Court of International Trade ruled late last month that Trump had overstepped his authority when he imposed tariffs. That ruling was stayed, but the fight is likely to head to the Supreme Court. All the while, major US companies like Apple and Walmart have butted heads with the administration over the tariffs and their bluntness about how tariffs will make affording things harder for consumers. Should You Buy Now or Wait? Our Experts Weigh In on Tariffs Should You Buy Now or Wait? Our Experts Weigh In on Tariffs Click to unmute Video Player is loading. Play Video Play Skip Backward Skip Forward Next playlist item Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 Share Fullscreen This is a modal window. This video is either unavailable or not supported in this browser Error Code: MEDIA_ERR_SRC_NOT_SUPPORTED The media could not be loaded, either because the server or network failed or because the format is not supported. Technical details : Session ID: 2025-07-25:dce0bd601bb37e029646c8a1 Player Element ID: vjs_video_3 OK Close Modal Dialog Beginning of dialog window. 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Our Experts Weigh In on Tariffs Amid all this noise, you might still be wondering: What exactly are tariffs, and what will they mean for me? The short answer: Expect to pay more for at least some goods and services. For the long answer, keep reading, and for more, check out CNET's price tracker for 11 popular and tariff-vulnerable products. What are tariffs? Put simply, a tariff is a tax on the cost of importing or exporting goods by a particular country. So, for example, a 60% tariff on Chinese imports would be a 60% tax on the price of importing, say, computer components from China. Trump has been fixated on imports as the centerpiece of his economic plans, often claiming that the money collected from taxes on imported goods would help finance other parts of his agenda. The US imports $3 trillion worth of goods from other countries annually. The president has also shown a fixation on trade deficits, claiming that the US having a trade deficit with any country means that country is ripping the US off. This is a flawed understanding of the matter, many economists have said, since deficits are often a simple case of resource realities: Wealthy nations like the US buy specific things from nations that have them, while those nations in turn may not be wealthy enough to buy much of anything from the US. While Trump deployed tariffs in his first term, notably against China, he ramped up his plans more significantly for the 2024 campaign, promising 60% tariffs against China and a universal 20% tariff on all imports into the US. "Tariffs are the greatest thing ever invented," Trump said at a campaign stop in Michigan last year. At one point, he called himself "Tariff Man" in a post on Truth Social. Who pays the cost of tariffs? Trump repeatedly claimed, before and immediately after returning to the White House, that the country of origin for an imported good pays the cost of the tariffs and that Americans would not see any price increases from them. However, as economists and fact-checkers stressed, this is not the case. The companies importing the tariffed goods -- American companies or organizations in this case -- pay the higher costs. To compensate, companies can raise their prices or absorb the additional costs themselves. So, who ends up paying the price for tariffs? In the end, usually you, the consumer. For instance, a universal tariff on goods from Canada would increase Canadian lumber prices, which would have the knock-on effect of making construction and home renovations more expensive for US consumers. While it is possible for a company to absorb the costs of tariffs without increasing prices, this is not at all likely, at least for now. Speaking with CNET, Ryan Reith, vice president of International Data Corporation's worldwide mobile device tracking programs, explained that price hikes from tariffs, especially on technology and hardware, are inevitable in the short term. He estimated that the full amount imposed on imports by Trump's tariffs would be passed on to consumers, which he called the "cost pass-through." Any potential efforts for companies to absorb the new costs themselves would come in the future, once they have a better understanding of the tariffs, if at all. Which Trump tariffs have gone into effect? Following Trump's "Liberation Day" announcements on April 2 and subsequent shifting by the president, the following tariffs are in effect: A 50% tariff on all steel and aluminum imports, doubled from 25% as of June 4. A 30% tariff on all Chinese imports until the new deal touted by Trump takes effect, after which it will purportedly go up to 55%. China being a major focus of Trump's trade agenda, it has faced a rate notably higher than other countries, peaking at 145% before trade talks commenced. 25% tariffs on imports from Mexico and 35% on those from Canada. This applies only to goods from each country that are not covered under the 2018 USMCA trade agreement brokered during Trump's first term. The deal covers roughly half of all imports from Canada and about a third of those from Mexico, so the rest are subject to the new tariffs. Energy imports not covered by USMCA will be taxed at only 10%. A 25% tariff on all foreign-made cars and auto parts. A sweeping overall 10% tariff on all imported goods. For certain countries that Trump said were more responsible for the US trade deficit, Trump imposed what he called "reciprocal" tariffs that exceed the 10% level: 20% for the 27 nations that make up the European Union, 26% for India, 24% for Japan and so on. These were meant to take effect on April 9 but were delayed by 90 days due to historic stock market volatility, and then delayed again to Aug. 1. These rates are subject to change until that new effective date, and some have already been altered: the rate against Japan was upped to 25%, the same as the rate against South Korea; Trump has also threatened a 50% rate against Brazil. Another deal announced on July 23 lowered Japan's rate to 15%. Trump's claim that these reciprocal tariffs are based on high tariffs imposed against the US by the targeted countries has drawn intense pushback from experts and economists, who have argued that some of these numbers are false or potentially inflated. For example, the above chart says a 39% tariff from the EU, despite its average tariff for US goods being around 3%. Some of the tariffs are against places that are not countries but tiny territories of other nations. The Heard and McDonald Islands, for example, are uninhabited. We'll dig into the confusion around these calculations below. Notably, that minimum 10% tariff will not be on top of those steel, aluminum and auto tariffs. Canada and Mexico were also spared from the 10% minimum additional tariff imposed on all countries the US trades with. On April 11, the administration said smartphones, laptops and other consumer electronics, along with flat panel displays, memory chips and semiconductors, were exempt from reciprocal tariffs. But it wasn't clear whether that would remain the case or whether such products might face different fees later. How were the Trump reciprocal tariffs calculated? The numbers released by the Trump administration for its barrage of "reciprocal" tariffs led to widespread confusion among experts. Trump's own claim that these new rates were derived by halving the tariffs already imposed against the US by certain countries was widely disputed, with critics noting that some of the numbers listed for certain countries were much higher than the actual rates and some countries had tariff rates listed despite not specifically having tariffs against the US at all. In a post to X that spread fast across social media, finance journalist James Surowiecki said that the new reciprocal rates appeared to have been reached by taking the trade deficit the US has with each country and dividing it by the amount the country exports to the US. This, he explained, consistently produced the reciprocal tariff percentages revealed by the White House across the board. "What extraordinary nonsense this is," Surowiecki wrote about the finding. The White House later attempted to debunk this idea, releasing what it claimed was the real formula, though it was quickly determined that this formula was arguably just a more complex version of the one Surowiecki deduced. What will the Trump tariffs do to prices? In short: Prices are almost certainly going up, if not now, then eventually. That is, if the products even make it to US shelves at all, as some tariffs will simply be too high for companies to bother dealing with. While the effects of a lot of tariffs might not be felt straight away, some potential real-world examples have already emerged. Microsoft has increased prices across the board for its Xbox gaming brand, with its flagship Xbox Series X console jumping 20% from $500 to $600. Kent International, one of the main suppliers of bicycles to Walmart, announced that it would be stopping imports from China, which account for 90% of its stock. Speaking about Trump's tariff plans just before they were announced, White House trade adviser Peter Navarro said that they would generate $6 trillion in revenue over the next decade. Given that tariffs are most often paid by consumers, CNN characterized this as potentially "the largest tax hike in US history." Estimates from the Yale Budget Lab, cited by Axios, predict that Trump's new tariffs will cause a 2.3% increase in inflation throughout 2025. This translates to about a $3,800 increase in expenses for the average American household. Reith, the IDC analyst, told CNET that Chinese-based tech companies, like PC makers Acer, Asus and Lenovo, have "100% exposure" to these import taxes, with products like phones and computers the most likely to take a hit. He also said that the companies best positioned to weather the tariff impacts are those that have moved some of their operations out of China to places like India, Thailand and Vietnam, singling out the likes of Apple, Dell and HP. Samsung, based in South Korea, is also likely to avoid the full force of Trump's tariffs. In an effort to minimize its tariff vulnerability, Apple has begun to move the production of goods for the US market from China to India. Will tariffs affect prices immediately? In the short term -- the first days or weeks after a tariff takes effect -- maybe not. There are still a lot of products in the US imported pre-tariffs and on store shelves, meaning the businesses don't need a price hike to recoup import taxes. Once new products need to be brought in from overseas, that's when you'll see prices start to climb because of tariffs or you'll see them become unavailable. That uncertainty has made consumers anxious. CNET's survey revealed that about 38% of shoppers feel pressured to make certain purchases before tariffs make them more expensive. About 10% say they have already made certain purchases in hopes of getting them in before the price hikes, while 27% said they have delayed purchases for products that cost more than $500. Generally, this worry is the most acute concerning smartphones, laptops and home appliances. Mark Cuban, the billionaire businessman and Trump critic, voiced concerns about when to buy certain things in a post on Bluesky just after Trump's "Liberation Day" announcements. In it, he suggested that consumers might want to stock up on certain items before tariff inflation hits. "It's not a bad idea to go to the local Walmart or big box retailer and buy lots of consumables now," Cuban wrote. "From toothpaste to soap, anything you can find storage space for, buy before they have to replenish inventory. Even if it's made in the USA, they will jack up the price and blame it on tariffs." CNET's Money team recommends that before you make any purchase, especially a high-ticket item, be sure that the expenditure fits within your budget and your spending plans. Buying something you can't afford now because it might be less affordable later can be burdensome, to say the least. What is the goal of the White House tariff plan? The typical goal behind tariffs is to discourage consumers and businesses from buying the tariffed, foreign-sourced goods and encourage them to buy domestically produced goods instead. When implemented in the right way, tariffs are generally seen as a useful way to protect domestic industries. One of the stated intentions for Trump's tariffs is along those lines: to restore American manufacturing and production. However, the White House also says it's negotiating with numerous countries looking for tariff exemptions, and some officials have also floated the idea that the tariffs will help finance Trump's tax cuts. Those things are often contradictory: If manufacturing moves to the US or if a bunch of countries are exempt from tariffs, then tariffs aren't actually being collected and can't be used to finance anything. This and many other points have led a lot of economists to allege that Trump's plans are misguided. As for returning -- or "reshoring" -- manufacturing in the US, tariffs are a better tool for protecting industries that already exist because importers can fall back on them right away. Building up the factories and plants needed for this in the US could take years, leaving Americans to suffer under higher prices in the interim. That problem is worsened by the fact that the materials needed to build those factories will also be tariffed, making the costs of "reshoring" production in the US too heavy for companies to stomach. These issues, and the general instability of American economic policies under Trump, are part of why experts warn that Trump's tariffs could have the opposite effect: keeping manufacturing out of the US and leaving consumers stuck with inflated prices. Any factories that do get built in the US because of tariffs also have a high chance of being automated, canceling out a lot of job creation potential. To give you one real-world example of this: When warning customers of future price hikes, toy maker Mattel also noted that it had no plans to move manufacturing to the US. Trump has reportedly been fixated on the notion that Apple's iPhone -- the most popular smartphone in the US market -- can be manufactured entirely in the US. This has been broadly dismissed by experts, for a lot of the same reasons mentioned above, but also because an American-made iPhone could cost upward of $3,500. One report from 404 Media dubbed the idea "a pure fantasy." The overall sophistication and breadth of China's manufacturing sector have also been cited, with CEO Tim Cook stating in 2017 that the US lacks the number of tooling engineers to make its products. For more, see how tariffs might raise the prices of Apple products and find some expert tips for saving money.
Yahoo
30 minutes ago
- Yahoo
How Trump's mass deportations could backfire on the American economy by shrinking paychecks
President Donald Trump has promised to unleash an economic boom that will turbocharge growth, fatten paychecks and chip away at America's mountain of debt. However, a new analysis from Trump's alma mater suggests that his immigration crackdown – a centerpiece of his second term – could do the exact opposite. Trump's policy of mass deportations would shrink most worker paychecks, erode gross domestic product (GDP) and spike the already-massive federal government budget deficit, according to a Penn Wharton Budget Model analysis shared exclusively with CNN. 'There is no question the US economy will get smaller as you deport a lot of the workforce,' Kent Smetters, professor of business economics and public policy at the University of Pennsylvania's Wharton School, said in an interview. 'You simply have fewer bodies to produce. Fewer people means a smaller economy.' During the 2024 campaign, Trump vowed to wage the biggest domestic deportation program in American history and eventually expel millions of people. The Penn Wharton analysis found that a four-year policy in which 10% of the nation's unauthorized immigrants are removed per year would increase federal deficits by $350 billion, reduce GDP by 1% and dent the average worker's wages. The higher deficits are driven by a combination of lost revenue and new spending required to make mass deportations possible – on top of the funding for border security, interior enforcement and deportations provided by the tax and spending cuts package Trump signed into law this month. If the immigration crackdown spanned 10 years, the cost to the federal government would rise to $987 billion, GDP would shrink by 3.3% and wages would tumble by 1.7%, researchers found. Why many workers could get hurt by deportations That's not to say all workers would be harmed by the mass deportations. Penn Wharton concluded that authorized, lower-skilled workers – including US-born ones – would get a pay bump due to less competition. Wages for those authorized, lower-skilled workers would jump by 5% by 2034, the analysis said. However, if deportations are reversed after four years, wages for authorized low-skilled workers would eventually drop. 'Part of the promise of deportation is that those left behind are supposed to be better off. In reality, it's a much more mixed result,' Smetters told CNN. Penn Wharton found that the outcome for high-skilled workers is clearer: They'd be worse off. That's because unauthorized, low-skilled workers complement higher-skilled workers, defined in the analysis as native-born citizens, permanent residents and visa-holding immigrants with at least some college education. Higher-skilled workers 'are generally harmed by deportation more than authorized lower-skilled workers are helped,' the Penn Wharton analysis found, adding that higher-skilled workers have a bigger impact on paychecks and GDP and contribute more to taxes. High-skilled workers would suffer a $2,764 loss in annual wages on average if the immigration crackdown spanned 10 years, Smetters said. 'If you're middle class to higher income, you're going to be hurt by deportation because you rely on lower-skilled workers to make your job easier and to make your life more comfortable,' Smetters said. Many farmworkers are unauthorized For instance, he pointed to office workers who are helped by lower-skilled employees who clean buildings, do security and help transport people. Lower-skilled workers, at times unauthorized, play central roles in various industries, including construction, restaurants and manufacturing. This is especially true in agriculture. Between 2020 and 2022, about 39% of crop farmworkers were US citizens, while 19% were authorized immigrants. That means the rest – 42% – held no work authorization, according to the US Department of Agriculture. 'There are a lot of jobs in the US that native-born people don't want – and foreign-born people are happy to have,' said Stephanie Roth, chief economist at Wolfe Research. The White House pushed back against the Penn Wharton findings. 'These sort of pedantic analyses miss the forest for the trees by not accounting for the immense costs that everyday Americans are forced to bear due to illegal immigration: violent crime, rising housing costs, eroding social trust and even the overbearing of emergency rooms,' White House spokesman Kush Desai said in a statement to CNN. Desai pointed to research that finds more than one in ten young adults in the United States are neither employed, pursuing higher education nor in vocational training. 'There is no shortage of American minds and hands to grow our labor force,' Desai said, 'and President Trump's agenda to create jobs for American workers represents this administration's commitment to capitalizing on that untapped potential to build America's next Golden Age while delivering on our mandate to enforce our immigration laws.' It's true that some young people are having trouble finding jobs. The unemployment rate for those aged 20 to 24 stands at 8.2% as of June – more than twice as high as the national rate, according to the Bureau of Labor Statistics. 'We need immigration' However, it's also true that America's aging population creates real challenges for the economy and businesses. Economists fear that as Baby Boomers continue to retire, businesses will struggle to find workers, a problem that would be compounded by a loss of foreign-born workers. Roth, the Wolfe Research economist, worries that mass deportations, along with the Trump administration's decision to terminate the legal status of hundreds of thousands of migrants, will cause some worker shortages and lift prices for consumers. 'We need immigration. Foreign-born workers are critical to the labor force – especially in this environment where the population is aging,' Roth said. Joe Brusuelas, chief economist at RSM, said the Penn Wharton study 'illuminates just how critical rational immigration policy is to the wellbeing of the American economy.' He said the United States needs comprehensive immigration reform that features cross-border migration to support the labor needs of manufacturing, construction, agriculture and household maintenance as well as leisure and hospitality. The study 'strongly implies that the current path of immigration policy is not economically sustainable nor supportive of growth or narrowing budget deficits,' Brusuelas said. 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CNN
an hour ago
- CNN
Video shows dire starvation crisis in Gaza
Distressing video shows the dire effects of the starvation crisis gripping Gaza. Humanitarian aid organizations blame Israeli policies for the crisis and urge Israel to end its blockade of the enclave. Israel says Hamas is at fault. CNN's Jeremy Diamond reports.
