American consumer pays the bill for protectionist rhetoric

Imported products became 4% more expensive, while domestic products rose 2%, revealing the direct effect of American trade policy

The promise, like so many others from the Trump era, was seductively simple: tariffs imposed on imported goods would be a weapon against foreign nations, forcing them to pay to access the coveted American market. Reality, however, insists on denying the platform rhetoric. Rigorous academic studies and unquestionable market data now paint a clear and troubling picture: the bill for the American far-right’s trade war is not being sent to Beijing or Berlin, but directly to American homes and businesses.

The central dogma of Trump’s trade policy is crumbling under the weight of empirical evidence. The narrative that foreign exporters, desperate to maintain their market share, would simply absorb the costs turned out to be an economic fantasy. Instead, as research led by Alberto Cavallo of Harvard University points out, “the majority of the cost appears to be borne by American companies.”

Its analysis, which monitored the prices of hundreds of thousands of products, shows that imported items became 4% more expensive, while domestic products, affected by increased costs in the supply chain, rose 2%.

This is the cold mechanics of the market in action, immune to inflammatory speeches. American companies, faced with a 17% average cost increase on imports, do what capitalism has always done: protect their profit margins.

The choice, for giants like Procter & Gamble or EssilorLuxottica, was not to sacrifice their profits in the name of a nationalist project, but to pass on the burden to the end consumer. A Reuters survey is devastating: 72% of companies monitored in Europe, the Middle East and Africa have announced price increases since the start of Trump’s offensive. The bill is being paid at the supermarket shelf, at the optical store, at the dealership.

The White House, cornered by the facts, calls for a vague “adaptation period” and the promise that, in the distant future, the logic will be reversed. It is a weak argument that ignores the immediate pressure on family budgets and the competitiveness of small and medium-sized companies that do not have the strength of multinationals to absorb such shocks.

The impact goes beyond the consumer’s pocket, destabilizing the country’s own macroeconomic management. At a delicate moment, when the Federal Reserve is trying to navigate the murky waters of inflation, tariffs act as a price accelerator, an inflationary force artificially created by political decision.

The dissonance within the Fed itself is symptomatic of the confusion generated: while a governor linked to Trump minimizes the effect as “relatively small changes”, the Boston Fed projects a 0.75 percentage point increase in core inflation, and President Jerome Powell himself admits that tariffs have already contributed significantly to the latest reading of 2.9%.

This policy of economic self-sabotage is not contained within American borders. It reverberates globally, sowing instability and constricting trade. The World Trade Organization has already drastically cut its global trade growth forecast to a mere 0.5%, an anemic number that portends difficulties for exporting economies around the world.

The European Union and Germany, engines of the global economy, are already registering sharp drops in their exports to the USA. ING bank projects a gloomy scenario, with a possible 17% drop in EU exports to the US over the next two years.

What we are witnessing is not a cunning commercial strategy, but the materialization of a far-right politics that disregards the complexity of the global economy in favor of brute force gestures. It is a policy that is based on a false premise, ignores the warnings of experts and, in the end, penalizes its own population.

Trump’s tariffs are not making America “great again”; they are making goods more expensive for Americans, complicating monetary policy, and poisoning the trade relationships that support global prosperity.

The inconvenient truth, as analysts warn, is that the full effect has not yet been felt. Companies are, in Cavallo’s words, “trying to find ways to soften the blow” over time. This means that upward pressure on prices will be continuous. The bill, which has already started to arrive, will become even steeper in the coming months, and will be paid by ordinary citizens, the silent victims of an ideological trade war that they never asked for.

With information from Reuters*