How Trump's tariffs on other countries are hurting Americans
What's the story
A new study from Yale University has warned that US President Donald Trump's high tariffs on countries like India and South Korea will have a major economic impact. The research predicts that these tariffs will cost American households an average of $2,400 (around ₹2.1 lakh) in lost income. This is mainly due to rising prices of everyday goods as a result of tariff-induced inflation.
Price surge
Tariffs to hit working-class families the hardest
The Yale study predicts that Trump's tariffs will raise the average effective tariff rate on affected products to 18.4%. This is the highest level seen in the US since the 1930s. The report also highlights how these tariffs are likely to increase prices of essential goods for working-class families. For instance, leather goods such as shoes and bags could see a price hike of up to 40%, while clothing may become costlier by 38%.
Cost increase
Food and vehicle prices also expected to rise significantly
The Yale study predicts a 3.4% average increase in food prices, with fresh produce potentially seeing a spike of up to 7%. For those planning to buy a car, the cost is tipped to climb by around 12.3%, translating into an additional $5,900 (₹5.2 lakh) for a new vehicle. These increases could make daily life considerably costlier for American families, especially those already struggling financially.
Economic consequences
Job losses and rising unemployment fears
The Yale report also warns of broader economic implications if these tariffs continue. It predicts that they might reduce US GDP growth by 0.5% in 2025-26 and lead to 500,000 job losses by the end of 2025. Unemployment is expected to rise by 0.3% in 2025 due to such tariffs, with continued pressure into the following year.
Trade impact
US trade deficit continues to worsen
Despite Trump's goal of reducing the US trade deficit, his tariff strategy seems to be backfiring. As companies scramble to import goods ahead of possible price hikes, overall US imports have gone up. Meanwhile, exports have not budged much, worsening the very deficit Trump promised to fix. The Congressional Budget Office (CBO) has also warned that Trump's tariffs could shrink the US economy relative to its potential performance without them.
India-US trade
India warns of retaliatory duties
India is directly affected by Trump's protectionist policies, with a 25% tariff now imposed on Indian imports. This has raised fears of escalating trade tensions between New Delhi and Washington. The situation has been further fueled by Trump's threats to penalize nations for buying Russian oil and military equipment. India has said it is committed to a fair bilateral trade agreement with the US but warned these moves could affect ongoing negotiations and even trigger retaliatory duties.