What impact would tariffs have on consumers?

From consumers to Wall Street investors to corporate executives, Americans are trying to gauge what impact the Trump administration’s tariffs – those enacted and proposed – will have on the economy and on consumer spending.

According to The Conference Board, the Consumer Confidence Index fell sharply in February, in part, because of uncertainty about how tariffs will affect the economy.

A new study by the Pacific Research Institute, authored by economist Dr. Wayne Winegarden, has raised alarms about the potentially detrimental effects of newly enacted and proposed tariffs on the American economy. The report highlights the potential for increased consumer prices, higher manufacturing costs, and reduced economic growth, arguing that these tariffs fail to meet their intended policy goals.

Winegarden's analysis suggests that tariffs, often used as a bargaining tool in trade negotiations, could inadvertently lead to a trade war, which would be counterproductive and harmful. He describes tariffs as a tax on consumers and businesses, raising the prices of everyday goods.

Key economic consequences

The study outlines several key economic consequences of increased tariffs, including a significant rise in the cost of living for American households. He argues that tariffs will fail to produce meaningful revenue for the federal government.

When it reported fourth-quarter earnings last week, Walmart warned that growth could slow as consumers absorb the impact of tariffs. In an interview with CNBC, Walmart Chief Financial Officer John David Rainey said the retailer would not be immune from the effect of tariffs.

Commerce Secretary Howard Lutnick is a strong advocate of tariffs, suggesting the administration’s proposed 25% tariffs on Canada and Mexico are bargaining chips, designed to get concessions from the two neighbors, persuading them to stop illegal immigration and the flow of drugs into the U.S.

“You know that the [fentanyl] labs in Canada are run by Mexican cartels, so this tariff model is simply to shut their borders,” Lutnick said In testimony before Congress. “It’s not a tariff, it is an action of domestic policy.”