The tariffs, including new 15% fees for most imports from the EU, will raise consumer prices by 1.8% in the short term, according to Yale Budget Lab. This is where shoppers can see higher prices.
Trump’s 15% EU tariff could raise prices for cars, drugs and luxury goods
President Donald Trump’s trade deal with the EU could raise prices for cars, medicines and luxury goods.
- New tariffs could raise prices for goods such as cars, furniture and medicines.
- Trump’s tariffs are expected to rise 1.8% in the short term, according to the Yale Budget Lab.
Imported cars, medicines, apparel and more can become more expensive in a few months as the US imposes a 15% tariff on most imports from the European Union.
Analysts announced it as President Donald Trump’s victory, announced on July 27th. US stocks were nearly high on July 28th, with the S&P 500 and NASDAQ reaching record highs after Trump announced tariffs well below the 30% charge that he was threatened at the beginning of the month.
But for our consumers, even lower tariffs are expected to drive higher prices. Yale Budget Lab estimates Trump tariffs, including new rates for EU imports, will rise by 1.8% in the short term.
“We’ve been working hard to get into the world,” said Ernie Tedesci, director of economics at Yale Budget Lab. “That makes sense.”
This is part of the sector where we can see higher prices in the coming months.
European cars
One of the EU’s biggest export sectors, automobiles will see some of the most notable price increases, according to Gary Hohhbauer, a senior non-resident fellow at the Peterson Institute for International Economics.
The 15% tariff is easing from the current 27.5% rate, but Hufbauer said EU companies do not want to absorb higher costs as the margins in the automotive industry are thin enough.
“We think that European car prices for sale in the US will probably rise at least 10%,” he told USA Today.
Hildegard Müller, president of the German Automotive Industry Association, warned that a 15% tariff could cost the German automotive industry “billions of dollars per year.” Already, Volkswagen has trimmed its full-year sales forecast after reporting a $1.5 billion hit from a $1.5 billion tariff in the first half.
According to Tedeschi, car prices hikes can vary depending on European manufacturers and models, as many people already operate factories in North America. So trade transactions between Canada and Mexico could also affect pricing.
“Consumers should keep an eye on rising prices for European auto imports, but we should not assume that all European brands will raise prices due to the complexity of the supply chain,” he said, expecting prices to be seen in relation to new EU tariffs this summer and fall and fall.
furniture
Furniture is another sector that could suffer from tariffs, according to Stephen Brown, assistant North America Economist at Capital Economics.
For example, Swedish company IKEA relies on China, Poland, Italy, Germany and Sweden to supply the “majority” of its products, according to its website. The company did not immediately respond to requests for comment, but Inter Ikea, a producer of IKEA furniture, told Reuters in November that just 10% of the products it sells in the US are made in the region.
“Unless you find other places to import or move from the supply chain, furniture prices can see some effect,” Brown said.
Pharmaceuticals
While certain sectors such as wine and spirits appear to be still in negotiations, the EU Commission’s Ursula von der Reyen Commission said that medicines are subject to 15% tariffs and certain generic drugs will not be exposed to tariffs.
According to Reuters, the EU is behind roughly 60% of drug imports to the US, making it the largest European export to the US by value.
However, Brown pointed out that pharmaceutical companies may be able to move production to the US more easily compared to other industries. For example, the Danish manufacturer behind GLP-1S Wegovy and Ozempic’s Novo Nordisk already exists in North Carolina and has plans to expand.
“There may be short-term price increases, but they may not be as durable as other products,” Brown said.
Additionally, if insurance covers imported drugs, consumers may not receive industry price increases.
Luxurious items
Luxurious items such as imported designer handbags and apparel may be seen not only at imported food, but also at higher prices.
“The difference between China and Europe from a tariff perspective is that China’s tariffs increase what people buy at Walmart and Target. Tariffs on European imports mainly conflict with what people buy at Whole Foods and high-end retailers.”
He noted that companies behind luxury goods tend to have higher margins and could be more willing to absorb some of the higher costs associated with tariffs.
machine
According to the Department of Commercial, machinery and electrical appliances are also major exports from the EU, with about 20% of the US in 2021 accounting for imports and imports from the EU. While consumers don’t buy the machine directly, experts warn that higher prices could ultimately drop as manufacturers adapt to higher costs.
“These are not necessarily products that directly or directly affect consumers, but they can indirectly affect consumers, especially after many years,” Tedeski said.
