As families across the United States gathered to give thanks during Thanksgiving last week, a small piece of good news emerged for consumers: the cost of a traditional Thanksgiving dinner declined for the second consecutive year. According to the American Farm Bureau Federation’s (AFBF) annual survey, the average price for a classic dinner for 10 was $58.08, reflecting a 5% decrease from the previous year. However, despite this decline, prices remain almost 20% higher than they were five years ago, raising questions about the sustainability of these decreased costs amid broader economic trends.
Amid this backdrop of fluctuating food prices is the looming possibility of increased costs due to President-elect Donald Trump’s proposed tariffs on imports from several countries, including China and Mexico. The president’s plan includes imposing a sweeping 60% tariff on goods imported from China and a 25% tariff on imports from Mexico and Canada. These policies aim to address issues that Trump describes as “ridiculous Open Borders,” but there is widespread concern among economists that such protectionist measures could negatively impact consumer prices across the board.
Economists have historically noted that tariffs, while intended to safeguard domestic industries, typically result in higher costs for consumers. The rationale is straightforward: tariffs function as taxes on imported goods, which businesses usually pass on to consumers in the form of increased prices. The specifics of Trump’s proposed tariffs could significantly affect everyday expenses. For instance, a hypothetical 10% tariff could raise overall prices by about 1.3% annually. However, more targeted tariffs could lead to even more significant disruptions as supply chains struggle to adapt to these sudden cost increases.
Recent experiences from Trump’s previous administration underscore the potential impact of tariffs. A notable example is the tariffs on washing machines introduced in early 2018, which led to a staggering 16.4% spike in prices over just three months. Over a year, the addition of tariffs caused American consumers to pay nearly $100 more for each washing machine and dryer. The broader trade conflict with China has similarly added significant monthly costs—around $3.2 billion—across various industries, affecting everything from electronics to furniture.
The repercussions of Trump’s historical tariff policies and proposed new measures extend beyond just holiday eating. For consumers, this may serve as a cue to stockpile certain imported goods—especially toys, household items, and clothing—that are likely to see increased prices. Investors, too, should stay vigilant, as industries reliant on foreign imports, such as retail and electronics, may be facing substantial challenges. Conversely, U.S. manufacturers and industries less dependent on international trade could emerge stronger. Companies like Nucor and U.S. Steel, which could see boosted demand amid higher foreign competition, as well as scrap metal businesses that may benefit from increased recycling, could be poised for growth.
As the new year approaches, the discourse surrounding Trump’s tariff proposals will likely intensify, generating headlines and influencing economic conversations. The exact nature of these tariffs—whether they will be fully enacted, selectively applied, or compromised—remains uncertain. However, the potential costs to consumers and implications for the economy are becoming increasingly clear. Amid potential price hikes and economic ramifications, both consumers and investors are encouraged to plan strategically to navigate the forthcoming challenges. As we celebrate the holidays, it’s essential to stay informed about shifting economic dynamics and prepare accordingly for what lies ahead.
