Analysis shows Trump's tariffs would cost employers $82.3 billion

Gulf Today

3 days ago

An analysis finds that a critical group of US employers would face a direct cost of $82.3 billion from President Donald Trump's current tariff plans, a sum that could be potentially managed through price hikes, layoffs, hiring freezes or lower profit margins, reported Associated Press.
The analysis by the JPMorganChase Institute is among the first to measure the direct costs created by the import taxes on businesses with $10 million to $1 billion in revenue, a category that includes roughly a third of private-sector US workers. These companies are more dependent than other businesses on imports from China, India and Thailand - and the retail and wholesale sectors would be especially vulnerable to the import taxes being levied by the Republican president.
The findings show clear trade-offs from Trump's import taxes, contradicting his claims that foreign manufacturers would absorb the costs of the tariffs instead of US companies that rely on imports. While the tariffs launched under Trump have yet to boost overall inflation, large companies such as Amazon, Costco, Walmart and Williams-Sonoma delayed the potential reckoning by building up their inventories before the taxes could be imposed. It was reported by Associated Press.
The analysis comes just ahead of the July 9 deadline by Trump to formally set the tariff rates on goods from dozens of countries. Trump imposed that deadline after the financial markets panicked in response to his April tariff announcements, prompting him to instead schedule a 90-day negotiating period when most imports faced a 10% baseline tariff. China, Mexico and Canada face higher rates, and there are separate 50% tariffs on steel and aluminum. Had the initial April 2 tariffs stayed in place, the companies in the JPMorganChase Institute analysis would have faced additional direct costs of $187.6 billion. Under the current rates, the $82.3 billion would be equivalent on average to $2,080 per employee, or 3.1% of the average annual payroll. Those averages include firms that don't import goods and those that do.
Asked on Tuesday how trade talks are faring, Trump said simply: "Everything's going well."
The president has indicated that he will set tariff rates given the logistical challenge of negotiating with so many nations. As the 90-day period comes to a close, only the United Kingdom has signed a trade framework with the Trump administration. India and Vietnam have signaled that they're close to a trade framework.
There is a growing body of evidence suggesting that more inflation could surface. The investment bank Goldman Sachs said in a report that it expects companies to pass along 60% of their tariff costs onto consumers. The Atlanta Federal Reserve has used its survey of businesses' inflation expectations to say that companies could on average pass along roughly half their costs from a 10% tariff or a 25% tariff without reducing consumer demand.
The JPMorganChase Institute findings suggest that the tariffs could cause some domestic manufacturers to strengthen their roles as suppliers of goods. But it noted that companies need to plan for a range of possible outcomes and that wholesalers and retailers already operate on such low profit margins that they might need to spread the tariffs costs to their customers.
The outlook for tariffs remains highly uncertain. Trump had stopped negotiations with Canada, only to restart them after the country dropped its plan to tax digital services. He similarly on Monday threatened more tariffs on Japan unless it buys more rice from the US.