President-elect Donald Trump's impending trade policy changes are set to send ripples through the American economy. With just two months until he takes office, experts are closely watching the potential consequences. U.S. manufacturers face a challenging future as they may become less competitive and consider moving operations abroad. Consumers, too, are likely to feel the pinch, with potential increases in prices and a reduction in the variety of products available.Key Insights from Mary E. Lovely
According to Chinese foreign investment policy researcher Mary E. Lovely, if President-elect Trump imposes a tariff on goods from China in 2025, U.S. inflation could rise by 1%. Despite a projected decrease in overall trade, she expects the U.S. economy to remain "fairly robust" in 2025. Lovely anticipates that Trump will begin imposing tariffs on China in the second or third quarter of 2025. In addition to higher prices, she warns that "some products will simply disappear from the marketplace."Tariff Timeline and Implications
Speaking at a monthly briefing at the Port of Los Angeles on Wednesday, Lovely detailed the expected timeline of Trump's tariff actions. She believes that after initiating tariffs on China in 2025, the new administration will then turn its attention to countries without free trade agreements and eventually to the 20 countries with existing FTAs that are currently tariff-free. The authority for these tariff impositions exists under Section 301 of the Trade Act. However, the exact tariff rates remain uncertain.Lovely also pointed out that since 25% of imports from other countries are parts used by American companies, the actual impact of Trump's tariffs may not be as large as initially promised. For example, when considering the products that American companies sell such as laptops, notebooks, cellphones, and machinery, which are a significant part of the imports from China, she believes the administration will adopt a more cautious approach.Effects on the Economy and Consumers
Lovely emphasized that while the U.S. economy is expected to be "fairly robust" in 2025, the new taxes on imports will have a negative impact. Higher prices will be passed on to consumers, with many predicting a one-percentage point increase in the inflation rate. This will not only affect consumers' purchasing power but also lead to a reduction in the variety of products available in the marketplace. As some products may simply disappear, consumers will have fewer choices when shopping.In conclusion, President-elect Trump's trade policy decisions in 2025 are likely to have far-reaching consequences for the American economy and consumers. The actions taken will shape the trade landscape and impact various sectors, highlighting the need for careful consideration and monitoring.
