It's not as though we couldn't have seen it coming. Section 4.26 of the Heritage Foundation's
Project 2025 made the case for tariffs on imported goods. The document argued that tariffs will force U.S. companies to onshore manufacturing. Trump's style of threatening and coercing U.S. trading partners with high tariffs has increased the toxicity of trade policy. This has all made for a rough start, with initial tariff announcements roiling the stock and bond markets and
stoking consumer fear and uncertainty. But now, two things have become clear. First, the Trump approach to tariffs has confused companies and the financial markets. Since March,
employment has plummeted in industries with increased exposure to higher tariff-related costs
. Second, and more important, the price of the chaos has come due, and it's being paid largely by working Americans.
Jeep maker, Stellantis, reported an expected $2.7 billion loss in the first half of 2025, partially due to tariffs. General Motors reported a $1.1 billion hit from tariffs on imported cars and parts in the second quarter of 2025. And Ford Motors estimates that tariffs will cost the company $1.5 billion in 2025. We will see working Americans absorb the full force of these tariff-related cost increases, tariffs on imported vehicles from Asia and Europe and, to some (still uncertain) extent from Canada and Mexico, in higher automobile prices. Tariff-induced higher prices for automobiles carry a significant opportunity cost for consumers. Tariffs are expected to increase the price of a new automobile by between
6 percent and 22 percent. That's an additional $3,000 to $10,500 per new car purchase, piled onto the
average automobile price of $48,000. By way of comparison, this incremental cost is the equivalent of about five weeks of the
average U.S. family food budget or 14 weeks of rental housing or mortgage payments.
Budget-constrained consumers make careful choices about how to spend their paychecks. For necessities like automobiles, higher tariff-induced prices will force them to cut back on spending in other important areas. The sheer size of this forced rebalancing stands, on balance, to further tighten budgets and lower working Americans' quality of life. The Trump administration's willful ignorance of how tariffs hit working Americans and is coming home to roost.
