President Trump is all set to impose hefty tariffs on various countries and their products. However, many people believe that this will only affect American citizens at the moment. How much more will the citizens have to pay exactly? It isn’t as simple as it may seem.
For example, a 10% tariff on shoes from China will raise their sticker price only 4%, while wine or olive oil from Italy will raise the price by almost 10%. Why is that the case? Well, tariffs aren’t the only factor determining the price. Currency exchange rates, the availability of alternatives, and the pricing strategies of the countries and the importer all play a role in the prices. Let’s have a look at the prices of some of the goods after the tariffs are imposed.
Let’s begin with Indian tablecloths, Chinese footwear, and Vietnamese clothing. According to Moody’s, an economic research firm, prices for these commodities are projected to rise only by about 2%, even with a 10% tariff. This is mainly due to the vast array of options available in the market. Additionally, the demand for these products is relatively low.
Next, we turn to wines and whiskey from Italy and the UK. Although wine prices do not necessarily influence consumption, consumers will incur a full 10% increase. Consequently, a $21.99 bottle will rise to $24.08. However, this adjustment applies solely to Italian wine, which is considered a niche product; the broader wine market will experience only a 0.3% increase in prices. Similarly, UK whiskey will see a 5% boost, while the overall whiskey market will remain relatively stable.
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Gaming consoles and phones from China will also experience a full 10% price hike, as there is no alternative for, let’s say, a PS5 or an Apple iPhone. Similar effects can be seen on laptops from China and cars from Mexico simply because there is no alternative.
