US trade policies are starting to show their impact on the economy. Following Tuesday’s inflation data, which indicated that prices of goods vulnerable to tariffs such as clothing and furniture are rising, more signs have emerged that the tax on imports is affecting businesses.
Data from the European Union and Switzerland shows exports from those countries falling due to higher costs, providing a disincentive to export goods to the US. This trend is part of a broader pattern, as companies begin to feel the effects of built-up stockpiles running out.
Investors may be too optimistic about the damage tariffs could cause, with the Nasdaq stock index reaching record highs recently. The situation bears some resemblance to frogs that don’t notice the gradual change in water temperature until it’s too late.
Thursday’s retail sales report and this week’s earnings reports from Volvo and Alcoa will provide further insight into how tariffs are affecting consumer spending patterns and business costs. Additionally, President Trump plans to send letters to over 150 countries outlining their new tariff rates, which will likely range between 10%.
Source: https://www.barrons.com/articles/trump-trade-tariffs-retail-alcoa-a4ed0d00