Trade wars, power plays, and economic fallout: Is Trump’s tariff strategy backfiring?

The day has officially arrived (kind of). Though President Donald Trump’s retaliatory tariffs were set to go into effect on August 1, he is giving Customs and Border Enforcement until August 7 to get ready for the additional processing necessary to charge the import duties.

On July 31, the day before the self-imposed deadline for deals of August 1, the president announced that Canadian imports to the US not covered by the USMCA would be charged a tariff of 35 percent. The punitive measure comes as the White House accuses Canada of not cooperating to stop the flow of fentanyl into the country, an accusation which Ottawa roundly rejects. Mexico, on the other hand, has been given a 90-day extension on the pause in rates to give the two sides more time to continue negotiating.

As for other major trading partners and smaller economies the US does business with, these are the tariff rates the White House published on July 31.

Public opinion is not with Trump

A recent YouGov poll found that only 18 percent of voters approve of the White House’s plan to increase tariffs, with just 37 percent of Trump voters supporting the initiative. When asked who stands to benefit from the tariff hikes, the results were even more striking. Only 11 percent of respondents believed American consumers would benefit most, with slightly higher support (19 percent) among Trump’s base. More than half—54 percent—said consumers would benefit least, including 27 percent of Trump voters. The largest share of respondents believed American manufacturers would benefit most, with nearly half of Trump voters agreeing, compared to just 15 percent of Kamala Harris voters.

When could prices begin to rise?

Though many economists believe shoppers haven’t yet felt the full impact of the tariffs, consumer prices are beginning to rise. In June, the Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose 0.3 percent, with some import-sensitive goods seeing even higher increases. Appliances rose 0.8 percent, apparel rose 0.4 percent, and footwear increased by 0.7 percent. Toys—nearly three-quarters of which are imported from China—jumped 1.8 percent.

The July CPI report will be released on Tuesday, August 12. Current forecasts from the Cleveland Federal Reserve Bank expect average prices to rise 0.1 percent, with the year-over-year increase falling slightly from 2.8 to 2.7 percent. However, Fox Business reported that major companies—including Procter & Gamble, Hershey’s, and Mondelēz International—are planning to raise prices toward the end of the year to offset losses from higher tariffs. Procter & Gamble owns popular brands like Tide, Gillette, Crest, and Head & Shoulders, while Mondelēz International owns Cliff, Oreo, and Belvita.

Wall Street not responding as it did in April

Investors haven’t reacted with the same concern to the current tariff rates as they did in April. The S&P 500, NASDAQ, and Dow Jones Industrial Average are all up since the start of the year, though slightly down compared to a week ago. As major corporations begin reporting earnings under the new tariff environment, investor sentiment may shift. Many economists expect growth to slow and prices to rise, as the cost of importing goods increases anywhere from 15 to 50 percent, depending on the country and the product.

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