Countless economists, business owners, consumers and foreign officials kept hoping that President Donald Trump wouldn’t follow through with steep new tariffs, but on Tuesday, March 4, those tariffs went into effect — including 25 percent tariffs on all goods imported into the United States from Canada and Mexico. Trump also raised tariffs on goods from Mainland China by 10 percent.
Economists are warning that the new tariffs will make a wide range of goods more expensive, from fruits and vegetables to electronics to cars. And the U.S. is looking at all-out trade wars: Canadian Prime Minister Justin Trudeau announced that Canada will enact a 25 percent tariff on U.S. goods imported into his country.
One of the economic voices who is sounding the alarm is investor Steve Rattner, who served a counselor to the U.S. Treasury Department during the Obama Administration and now offers economic analysis for MSNBC.
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During a Wednesday, March 5 appearance on MSNBC’s “Morning Joe,” Rattner warned that the new tariffs come at a time when consumer confidence is already low in the U.S.
The 72-year-old Rattner told MSNBC’s Willie Geist, “These new tariffs on China, on Mexico and on Canada have brought our average tariff rate to over 10 percent. And just to put that in perspective, this is the highest tariff rate we have had since World War 2. The whole history of post-World War 2 was bringing tariffs down, bring countries together — making them economically more integrated as a means also of having more peace and less likelihood that one of them would attack another. And now, Trump has gone the other way. He’s doing this against the backdrop that is not ideal: inflation.”
Rattner warned that if U.S. consumers are expecting more inflation, they will be less likely to spend money — which is bad for the economy.
“Right now,” the former U.S. Treasury Department official told Geist, “consumers are expecting 4.3 percent inflation. And with a couple of exceptions, that’s the highest it’s been since in the post-COVID period. And tariffs have played a big role in this…. It has penetrated the public consciousness that tariffs are inflationary. And they are now looking at more inflation, which simply makes the Fed’s job harder.”
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During her 2024 presidential campaign, Democratic then-Vice President Kamala Harris warned that the tariffs Trump was proposing would amount to a steep new tax on U.S. consumers — a warning that Rattner echoed on “Morning Joe.”
Rattner told Geist, “As I’ve said repeatedly, repeatedly, repeatedly — and you’ve said it — it is a form of national sales tax. According to the Budget Lab — again, nonpartisan group — they think that the average cost to an American will be about $1800 a year from these tariffs. And of course, if you impose more tariffs, the costs will go up. And not surprisingly, again, these tariffs hit poor people the most: people down at the bottom in the lowest 10 percent…. People well down the food chain, they’re going to lose 2.4 percent of their income.”
Noting how many goods Mexico imports to the U.S., Rattner added, “All you guacamole lovers out there, yes, virtually every avocado is imported from Mexico, and the price of avocados are likely to go up 25 percent.”
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