Tyler Schipper, an economist and associate professor in the College of Arts and Sciences at the University of St. Thomas, recently spoke to Marketplace about the connection between tariffs and rising supply chain prices.
From the story:
Although President Donald Trump has a habit of slapping on and then rolling back tariffs, these duties may have lasting effects on consumer prices, making it difficult to reset the proverbial clock on trade.
Products that Americans want to buy from around the world currently face a tariff rate of at least 10%, which has consumers bracing for price increases. Tariffs are a tax that U.S. importers pay to the U.S. government. Importers can pass them along to you in the form of higher prices or just eat the costs.
Even if the tariffs are later removed, experts told Marketplace, the prices for some goods may not fall back to their original levels if demand is high or companies have to reorganize their supply chains. ...
But the prices of some goods, like fruit and vegetables, may be less sticky. Let’s say Trump decided to impose a 25% duty on avocados from Mexico and then removed it. (Mexican avocados are currently exempt from tariffs.)
“When you take off those tariffs, it would be much easier to simply lower the price of avocados because you haven't had dramatic supply chain changes,” Schipper said. “There’s only really one place to get the avocados.”
