Tariffs have been in effect for several months now. Not only will the rate on billions of dollars of Chinese imports soon to be increased to 25%, but there may also be tariffs placed on hundreds of billions of dollars of additional imports later in 2019. Low income families or those that live paycheck to paycheck (which is most Americans) should start to plan now for higher costs.
We do not write about politics. This site and blog is not meant to be political, so we will not write whether we believe in the use of tariffs or not. In addition, like many things in life, the situation is complicated with many pros and cons . Also note that the tariff situation is very fluid; it could change even before this article is posted. The only reason we write about this tariff situation is that it could potentially impact every single American, and it is better to be aware and plan now vs. be surprised in weeks or months. The more time that a low income family (or anyone) has to plan, the better off they may be.
2019 tariffs cost
Once again, this entirely depends on what items will have tariffs and what those percentages will be. However, as we currently type, the tariff rate will increase within a matter of days from 10 to 25% on about $250 billion in Chinese imports. The minority of those items are not consumer goods.
However, the news may get much worse in a matter of months. Why? As there may an additional $300 billion of items hit with tariffs later in the year, and that will mostly be consumer goods, or things that every person buys on a daily, weekly, or monthly basis.
As we said, if the $300 billion in tariffs go through later in 2019, then this is when you will see the biggest hit to your budget. The tariff could be 10 – 25% or higher. While some companies may not try to pass through costs, some items are bound to be more expensive.
It is impossible to determine how much it will cost an American or low income household. But some studies show that the financial impact may range from $500 to $1000 per household. This means you should plan on spending more money later this year on “essentials”.
What may you expect to pay more money on? How about everything! School supplies, TVs, cell phones, microwave, sneakers, some food (vegetables, fish, etc.), furniture, clothes, toys, and thousands of other items. The list goes on and on, and these tend to be items that all Americans buy. So, the impact will hit low income families on those living check to check the most.
As we said, there are pros and cons to tariffs. As an example, higher tariffs on imports could lead to more and higher paying jobs here in the US, and there are indications this has been happening for years. Or tariffs may help discourage foreign countries (China) from industrial theft, computer hacking of Americans and the like. So those are two examples of pros. But of course, a con is the cost to Americans (many families who can’t afford it) and higher friction with foreign nations. So those are examples of negatives.
We do not try to say whether tariffs are good or bad, or what should or should not be done, as there are many pros, cons, and levels of complication to this.
The only reason we write this is to help bring visibility for lower income families. They should start to plan on paying more for school supplies, Christmas toys, clothes, and other items….all of those core “needs” that households have. Now whether the tariffs go through in 2019, and whether the cost of goods goes up, time will tell. But start to be aware and plan for it now.