To help you understand what is going on in the economy, politics and beyond, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we publish many (but not all) of our forecasts a few days afterward online. Here’s the latest...
How precisely will tariffs affect the economy? The overall impact depends on whether President Trump continues to ease the duties he initially introduced or decides to pursue his original, aggressive approach. But some specific effects are already coming into focus.
U.S. trade with China will be up-ended, since Trump has imposed far higher tariffs on Chinese imports than the 10% rate he has applied to most countries’ imports while he seeks trade deals on a country-by-country basis. Despite exemptions from the highest duties for imported electronics from China, the two countries are effectively at war when it comes to trade.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Beijing responded to Trump with steep levies of its own on virtually all U.S. goods. China accounts for 13% of America’s imports. That’s down from 21% in 2018 but still hefty: $439 billion in imports last year.
Let’s look at how that huge sum breaks down by product type:
- $124 billion in Chinese electronics — again, temporarily exempt from the highest new U.S. duties.
- $94 billion in machinery and instruments.
- $37 billion in clothing.
- $30 billion in toys.
- Plus $19 billion in plastic products.
- $19 billion in furniture and home furnishings.
- $16 billion in base and fabricated metals.
- Another $100 billion in miscellaneous goods.
Consumers will see many low-cost Chinese goods disappear from shelves, since many have thin profit margins and can’t be imported profitably anymore.
Multinational companies will need time to move production out of China when it comes to consumer goods that are no longer viable to export to the U.S. For instance, one city in China produces a third of the global production of socks. Moving production of low-cost goods back to the U.S. seems unlikely, despite the administration’s reshoring goals — U.S. wages are prohibitively high for that sort of low-skill labor. Manufacturing jobs here are high-wage and high-skill.
The U.S. industries most dependent on imports, from China and elsewhere: Petroleum, chemicals, autos, electronics, machinery, metals, electric gear, aviation and appliances. Each imports at least 20% of the parts and materials that they need to make their products.
About 10% of building materials are imported, though the figure is higher for home appliances, lighting, HVAC and plumbing materials.
China’s retaliation will especially target two U.S. sectors: Farming and tech.
Beijing is curtailing all exports of certain rare earth minerals, which are key to high-tech sectors like semiconductors, aviation, robotics, defense and telecom.
Chinese tariffs figure to cost American farmers access to a massive market. Farm goods comprise 8% of America’s total exports, and China’s leaders understand how politically sensitive U.S. presidents are to pain inflicted on the farm economy.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related content
- What’s Happening With Trump Tariffs? News, Updates and Analysis
- Trump Dials Back Most Tariffs but Targets China
- Trump's Sweeping New Tariffs Rattle Wall Street, Main Street
- Kiplinger Trade Outlook
- Kiplinger GDP Outlook
-
Your Medicare Costs Are Set to Soar: What to Expect Over the Next DecadeMedicare beneficiaries will face higher premiums, deductibles and surcharges starting in 2026 and continuing over the next decade. Here's what you need to know.
-
How Different Generations Invest and What They Can Teach YouBoomers, Gen Xers, millennials and Gen Zers are taking varying approaches to investing. Here's what they're doing and key lessons you can learn from them.
-
After Years of Stagnant Growth, Hope Emerges for EU EconomyThe Kiplinger Letter Can a German fiscal push outweigh French political peril?
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
September Fed Meeting: Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts SayThe August CPI came in higher than forecast on a monthly basis, but Wall Street still expects a rate cut at next week's Fed meeting.
-
How AI Puts Company Data at RiskThe Kiplinger Letter Cybersecurity professionals are racing to ward off AI threats while also using AI tools to shore up defenses.
-
Trump's Economic InterventionThe Kiplinger Letter What to Make of Washington's Increasingly Hands-On Approach to Big Business
-
Where is the Foreign Dividend Boom Headed?It's been a golden six months for foreign dividend stocks, but can any be relied on for predictable income going forward? Here are some options.
-
AI Start-ups Are Rolling in CashThe Kiplinger Letter Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.
