WSJ Your Money Briefing - Trump Tariffs: How Much More Will Consumers Pay?

Episode Date: March 5, 2025

President Trump has imposed 25% tariffs on goods imported from Mexico and Canada and an additional 10% tariff on Chinese imports. In response, those countries plan to retaliate with tariffs of their own. Wall Street Journal data news editor Anthony DeBarros joins host Ariana Aspuru to discuss how the tax could ripple through to everyday prices for American consumers.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Want to own part of the company that makes your favorite burger? Now you can. With partial shares from TD Direct Investing, you can own less than one full share, so expensive stocks are within reach. Learn more at td.com slash partial shares. TD. Ready for you. Here's your money briefing for Wednesday, March 5th. I'm Mariana Aspuru for The Wall Street Journal. Wednesday, March 5th. I'm Mariana Aspuru for The Wall Street Journal. President Trump's tariffs on goods from Mexico, China and Canada took effect on Tuesday.

In response, those countries plan to retaliate with tariffs of their own. So how will this all trickle down to consumers? It's when imported or domestic alternatives are not available, or when we're talking about a premium product. A good example is an iPhone. If you're a 100% iPhone user, you're likely to buy that brand even if the price goes up.

Same thing with video game consoles. That's an industry dominated by a handful of companies and where consumers are very loyal. We'll talk to Wall Street Journal data news editor Anthony DeBarros about how much more you should expect to pay. After the break. President Trump has placed a 25% tax on goods from Mexico and Canada and introduced an extra 10% tariff on Chinese imports, on top of other levies imposed a month ago. Canada responded with plans to impose 25% tariffs on nearly $100 billion of U.S. imports. China announced tariffs on U.S. agricultural goods along with other measures against U.S. companies, and Mexico's president said it would also

retaliate with a range of moves to be announced Sunday. Wall Street Journal data news editor Anthony DeBarros joins me. Anthony, what influences how much of a tariff is passed through to consumers? When we're talking about changes in the prices that consumers pay, tariffs aren't the only factor at work. Price impacts depend on currency changes, whether the consumer has a lot of alternatives to choose from, and a company's pricing strategies. And all of this affects what we call pass-through, how much of a tariff ultimately reaches the consumer. And your team worked alongside the economic research firm Moody's to model how some of

Trump's tariffs could affect prices on household goods. From your story, it seems like competition plays a large role in this. Competition is definitely part of the calculus. One product Moody's considered was household linens, such as tablecloths. The U.S. imports linens mainly from India, China, and Pakistan, but from dozens of other countries as well. So there's a lot of competition. And on top of that, consumers generally aren't particular about who makes a tablecloth or where it was made. So taking that level of competition and buying options into account, Moody's estimated that a 10%

tariff on tablecloths from India, for example, would result in just a 2% price increase. And that dynamic would apply to other competitive items like clothing or cosmetics as well. When are buyers likely to feel the impacts of a tariff? It's when imported or domestic alternatives are not available, or when we're talking about a premium product. A good example is an iPhone.

If you're a 100% iPhone user, you're likely to buy that brand even if the price goes up. Same thing with video game consoles. That's an industry dominated by a handful of companies and where consumers are very loyal. How much of a hike up in price could someone see on a product where the tariff is passed through consumers? So in the case of a video game console made in China, Moody's estimated that almost all of a 10% tariff would pass through to the consumer. So that's not small potatoes. If we're talking about

a $500 machine, then consumers would see a price increase of about $48. What about a more niche product like imported wine? Well, that's another case where Moody's estimated that most of a 10% tariff will get passed through. Companies know that if a person is settled on a certain label of Italian wine, that person is likely to simply absorb a price increase. Now that said, a niche category like wine shows how tariffs on one product from one country can raise prices throughout the category even for domestic products. A maker of California wines, for example, might take the opportunity to push their price

up to increase profits. And if the new higher price is lower than the tariffed alternative, it could lead to greater market share for the domestic producer. Trump has placed a 25% tariff on Mexico, which is the top foreign supplier of cars and SUVs. What might that tariff mean for Americans shopping around for a new car? Moody's estimated that 70% of the tariff on those vehicles from Mexico would get passed on to consumers and to put that in dollars that's an additional $7,000 on the price of a $40,000 SUV but they also estimate that the tariff on

Mexican-made automobiles would add about 6% to the cost of all vehicles as manufacturers and dealers see a chance to gain profit and market share. Now we'd probably see the same dynamic play out in other products. A good example is washing machines. They were hit with tariffs during the first Trump administration in 2018 and a research study found that led to higher prices not just a washing with tariffs during the first Trump administration in 2018. And a research study found that led to higher prices, not just of washing machines, but also dryers, because people typically buy the two together and retailers saw an opportunity to earn more.

Even domestic retailers? Yeah. How soon can consumers expect to see price changes? We would start to expect to see prices on certain items be affected within the next month or so. Now that said, a lot of companies that import goods spent a lot of money during December and January and during February as well to bring in product ahead of the tariffs. So that could mitigate some of the immediate price impacts that we're talking about here. That's WSJ data news editor Anthony DeBarros.

And that's it for your money briefing. This episode was produced by Zoe Kolkin with supervising producer Melanie Roy. I'm Marianna Aspuru for The Wall Street Journal. Thanks for listening.