How Tariffs Will Affect Consumers in Central MN

Tariffs and the impact of those in the United States have been talked about quite a bit in recent months.  St. Cloud State Economist King Banaian joined me on WJON to explain what has happened so far and what it means.  He says the Trump administration has enacted 10% tariffs for some countries and 20% for others.  The exception is China where 145% tariffs have been enacted. Banaian indicates it has been reported that the U.S. and China are talking with the hope that those will be reduced.

Banaian says because of the talks many ships are leaving China half or 2/3 full because they are waiting to see if tariffs will change.  He says there are also fewer ships going over to China from the U.S.  Banaian suspects we will see spot shortages of products on shelves in June or July.  He indicates the effects are delayed by a month or two.

Banaian says not everything is tariffed... there are exceptions.  Those exceptions include items for phone, semi-conductors and products for automobiles.  He says the White House is sensitive as to what the impact will be on the auto industry.  Banaian says tariffs are a regressive tax which means they hit the poorer population the hardest.

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The automobile industry could still be affected by tariffs.  Banaian expects new and used cars to go up in price.  He says those who have leased vehicles sign an agreement where they can buy the vehicle at the end of the lease for the agreed upon price.  That price will be cheaper than the cost of new cars at the end of that lease.  Banaian suspects many people will choose to buy the leased car which will diminish the supply of lightly used cars on the market.  He says because of that, there will be fewer used cars on the market and the ones that are, will be higher in price.  Banaian did say vehicle trade values should be higher, which will help out some consumers.

If you'd like to listen to my conversation with King Banaian, it is available below.  Banaian also discussed the possibility of a recession and gas prices.