Won't be pain-free

Economists warn tariffs won't be pain-free

From CNN's Elisabeth Buchwald

Tariff revenue may help boost manufacturing and the government’s financial situation. But it’s not necessarily coming pain-free.

Businesses have, for the most part, been absorbing the higher costs without raising prices. But that’s not the case for every business. Appliances, toys, consumer electronics tariffs and other goods that are sensitive to tariff changes are getting more expensive, recent inflation reports published by the government show. And many companies, including Walmart and Procter & Gamble, are warning of forthcoming price hikes.

The uncertainty tied to tariffs has also caused businesses to put off hiring more workers, leading to fewer job openings, several economic surveys indicate.

“Tariffs are going to have a negative economic effect on the American economy,” Tedeschi told CNN. The Yale Budget Lab estimates that Trump’s tariffs will shave half a point off US gross domestic product this year and next.

“That’s going to partly but not fully offset the amount of revenues that we raise from tariffs. Because if your economy is growing less than you thought, then, yeah, you raise this tariff revenue, but maybe you raise a little bit less in income taxes and payroll taxes as a result.”

Trump and his administration see it differently, however, arguing that the recently enacted mega tax cuts and spending bill, combined with the tariff revenue, will supercharge the US economy over time.