Under former President Donald Trump new and steep tariffs on many imported goods went into effect. He especially went after countries like Cambodia, Bangladesh, Brazil, Vietnam, and Indonesia. Beginning August 1, those new tariffs will increase prices across the entire economy. Get ready to pay a whole lot more for your footwear, coffee and electric vehicles.
The growing compliance burden is exacerbated by the tariffs, including a steep 36% on goods from Cambodia and 35% on those from Bangladesh. This is problematic because Trump has already slapped tariffs as high as 50% on several of these countries. This includes key U.S. trade partners such as Japan and South Korea. That’s the equivalent of the United States adding a punishing 30% tariff on all Chinese exports today. These new levies certainly don’t help matters. In fact, China produces almost $4 out of every $10 in imported footwear that Americans buy. Consequently, the athletic footwear industry may be hit with some of the largest price hikes.
Impact on Footwear Industry
The tariffs are set to disproportionately affect the footwear market. The Footwear Distributors and Retailers of America stated that these new tariffs would “hit American consumers and our industry hard.” Given the current dependence on imports from countries at risk of escalation, manufacturers will find it difficult to offset the added expense.
Industry experts including former undersecretary for transportation policy at USDOT Jason Miller have warned consumers to brace for increased costs. I’d anticipate that price going up,” he said. There’s still room for manufacturers to adjust their pricing strategies. Americans can’t overlook the far-reaching effects of these changes.
“If you look at the tags on your clothing it’s made in these places.” – Handley
Tariffs are increasingly casting their net over imports from countries such as Cambodia and Bangladesh. This would mean significantly higher prices for Americans across a wide range of commonly purchased goods, most noticeably for apparel and shoes.
Copper Tariffs and Electric Vehicles
Trump’s proposed tariffs go beyond footwear. They set their sights on copper imports, and this one has the potential to majorly affect the nascent electric vehicle (EV) market. A Congressional proposal for a 50% tariff on copper imports adds to worries about increasing costs for EV producers. In fact, an electric vehicle needs approximately 83 kilograms (183 pounds) of copper, making it one of the most important factors in EV production.
Given that EVs require four times the copper of a conventional vehicle, the demand for copper will increase with EV adoption. If tariffs increase copper prices, that would raise the overall cost of EVs, hurting their affordability and harming consumer adoption rates.
Coffee Prices Under Pressure
The new tariffs deeply impacted the coffee market. Brazil is therefore confronted with an unrealistically high 50% tariff on its exports to the United States. In fact, last year alone, the U.S. imported nearly $2 billion dollars’ worth of coffee from Brazil. The introduction of these tariffs will no doubt lead to higher prices for coffee drinkers in the U.S.
So much so that prices for coffee have already jumped more than 11% in May from a year earlier. While these new tariff measures are not yet effective, it’s worth paying attention. As a consequence, consumers will start paying more at their favorite coffee shop and in grocery stores.
