President-elect Donald Trump’s proposed tariffs on goods from Canada, Mexico, and China could have a significant impact on small businesses in the U.S., according to a Colorado economist.
Economists warn that these moves may lead to higher prices for consumers and increased costs for businesses that rely on imports.
Impact on Consumer Prices
The 25% tariff on goods from Mexico and Canada could lead to noticeable price increases for American consumers.
Products such as electronics, car parts, and everyday goods imported from these countries could see a rise in cost.
Dr. Kishore Kulkarni, a Coloradan economist believe this tariff could cause inflation to either build slowly over time or spike quickly, depending on when the tariffs are enforced.
In addition to the Mexico and Canada tariffs, a 10% tariff on Chinese imports is expected to further raise consumer prices.
These increased costs would likely affect various sectors, from technology to pharmaceuticals. If tariffs are imposed rapidly, consumers could see a sharp increase in prices on everyday goods.
Challenges for Small Businesses
Small businesses could face challenges as they deal with higher production costs resulting from the price hikes on imported raw materials.
Products that rely on these materials may become more expensive to produce, putting additional pressure on small companies.
Many small businesses could be forced to pass these higher costs on to customers, potentially losing sales as a result.
Local manufacturers may also struggle to compete with the changing global price shifts caused by the tariffs.
As the cost of production increases, American-made goods could become less affordable compared to cheaper foreign alternatives.
This could make it harder for smaller manufacturers to maintain a competitive edge in the market.
Uncertainty in Tariff Implementation
While Trump’s tariffs are planned, their actual implementation remains uncertain.
The president-elect has suggested these tariffs as a negotiating tactic and may use them to gain leverage in trade discussions.
There’s still a possibility that the tariffs will not be fully enacted, or their scope could be reduced during his administration.
Historically, Trump’s tariff threats have not always materialized.
In his first term, he threatened steep tariffs, but many were either lowered or not fully enforced.
Economic experts predict that, while tariffs may be proposed, they might not be implemented as drastically as expected, especially as trade talks evolve.
