HOST ARI SHAPIRO:
The additional tariffs caused prices to rise and markets to decline when they went into force this week. Yale University’s Budget Lab has been estimating the precise amount that these tariffs are anticipated to increase the cost of goods. The lab’s founders and executive director, Martha Gimbel, will now take us on a virtual shopping expedition. Hello.
MARTHA GIMBEL: I really appreciate being here.
Shapiro: Now, pretend that we have parked our vehicle, picked up our shopping cart, and are entering a big-box store—Target, Walmart, Costco, whatever you want. First, let’s go to the clothes area. I’d like to purchase a simple white T-shirt. How much extra will it probably cost?
GIMBEL: That is likely to cost you around 45% extra.
SHAPIRO: Whoa. Whoa. Why so much?
GIMBEL: The United States doesn’t really make a lot of apparel. Nearly majority of it is imported. Clothing, more than almost anything else, will be severely impacted by these very high tariffs, especially on nations like Vietnam. I should also point out that while I’m providing precise figures here, the circumstances are always shifting.
SHAPIRO: Obviously, yes.
GIMBEL: As other nations respond against us and further retaliatory tariffs are imposed, the numbers just keep rising.
SHAPIRO: The statistics may have altered by nightfall, since we are recording this lunchtime on the East Coast. However, the cost of apparel is rising, and I imagine this also applies to T-shirts, underwear, socks, and other necessities.
GIMBEL: Yes, it won’t be nice if you have to purchase new clothing for your child, who is growing up quickly.
Shapiro: Now that we’ve moved our shopping cart to the food area, let’s pretend I want to get some sugar so I can bake. How do these new tariffs affect the price of a pound of sugar?
GIMBEL: Regarding sugar, I have great news for you.
SHAPIRO: You mean?
GIMBEL: There will only be a 4% increase in prices.
Shapiro: Just 4%. In the perspective of 45% or more for clothing, that’s fantastic. How come that’s less than clothes?
GIMBEL: We do produce more sugar domestically. Therefore, even if domestic manufacturers would raise their prices, the effect will be different. Generally speaking, it’s a nice location to be if you want to satisfy your sweet craving in order to get through this difficult time.
Shapiro: Does this mean that essentials like rice and wheat will also largely rely on where they are produced; if there is a lot of it in the United States, you should be OK, but if not, you may have to pay more?
GIMBEL: You brought up rice, huh? I hate to notify you that rice prices have increased by around 27%.
SHAPIRO: Wow. And I suppose that’s merely because a lot of rice is imported from Asian nations, where hefty taxes are expected.
GIMBEL: That’s right.
SHAPIRO: All right, I’ll have to clean up if I’m going to be cooking. Let’s purchase a pair.