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US Businesses Are Worried About Trump’s Proposed Tariffs | Global News Avenue

US Businesses Are Worried About Trump’s Proposed Tariffs

Main points

  • Many economists predict President-elect Donald Trump’s potential tariffs on Mexico, Canada and China will raise prices for U.S. consumers. The Federal Reserve’s latest Beige Book shows that this has also become a concern for American companies.
  • Business leaders worry that tariffs could impact their profits by driving consumers out of the market and making internationally imported products more expensive.
  • Many reported that they were stocking up on inventories to avoid the negative impact of potential tariffs.

U.S. businesses are concerned about the inflationary impact of tariffs and are taking action to protect future sales.

This is based on this month’s beige bookwhich gives the Fed insight into economic conditions across the country. In December, U.S. business leaders reported that they were stockpiling inventory and awaiting investment as uncertainty over potential tariffs from President-elect Donald Trump weighed heavily.

Trump said last week that he planned to impose high tariffs Once he took office, he started importing from China, Mexico and Canada. Economists have expressed concern Regarding tariffs, it said import taxes could lead to higher prices for U.S. consumers as importers pass the price increases on to shoppers.

U.S. businesses worry about how tariffs will affect them

While U.S. business leaders’ overall economic outlook has improved slightly since the last edition of the Beige Book, they have expressed concerns about how tariffs will drive up prices.

Ernie Tedeschi, director of economics at the Yale Budget Lab, said tariffs on Mexico, Canada and China could increase prices by about $1,180 per household. The Tax Foundation said tariffs could discourage U.S. consumers from buying products.

“Inflation expectations for businesses’ own prices and overall inflation have risen, with many businesses expressing concerns about the inflationary impact of potential tariffs,” Philadelphia Fed officials wrote.

Officials in Dallas said some business contacts cited the election results as a major driver of optimism, but some were concerned the tariffs would impact international sales.

What measures are companies taking?

Companies that work with imported products, e.g. Electronics, shoes, cars, fresh fruits and vegetablesparticularly worried.

Fed officials said the uncertainty has led some companies to avoid investing until policies are implemented or countries reach an agreement. Business leaders reported they were stockpiling inventories ahead of Trump’s inauguration in January to mitigate the damage from potential tariffs.

“A computer retailer has noticed an increase in sales in recent weeks as business customers move forward with switching plans to avoid expected price increases on imported electronics,” Chicago Fed officials wrote.

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