News / US consumers face more price hikes as Trump announces more tariffs

ID 206980496 © Iryna Drozd

More tariffs from the Trump administration are likely to result in even higher prices for US consumers, with concerns about price elasticity of certain commodities.  

President Donald Trump has expanded the scope of goods tariffed under section 232 to include imported timber and derivative wood products: a 10% global tariff on softwood, 25% on certain upholstered furniture, which will increase to 30% on 1 January, and 25% on kitchen cabinets and vanities, which will increase to 50% on 1 January. 

The president justified the additional charges, saying they would “bolster American industry and protect national security”. An investigation by the secretary of commerce concluded that an over-reliance on foreign timber and derivative products could “jeopardise the US defence capabilities, construction industry, and economic strength”. 

The executive order filed yesterday notes that the US military spends more than $10bn a year on constructio, and is testing innovative products such as cross-laminated timber. 

“Foreign supply chains and major exporters increasingly fill US demand, creating vulnerabilities to disruptions,” it said.

According to the order, the US has production capacity to supply 95% of its 2024 softwood consumption, but foreign government subsidies and “predatory trade practices” had “undermined” the competitiveness of domestic wood products.  

However, the White House revealed that countries that negotiate with the US to address this “threat” of wood imports on national security “may be able to secure an alternative” to the pending tariff increases. 

Indeed, the UK, EU, and Japan will enjoy “more favourable treatment” that reflects the terms of their trade deals with the US: the tariff on wood imports from the UK will not exceed 10%; and those from the EU and Japan will not exceed 15%. 

While Mr Trump’s reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA) remain under legal scrutiny – and may be revoked – Section 232 tariffs are specifically focused on national security threats related to specific products, so it is unclear if they will be questioned in the same way.  

Meanwhile, this month secretary of commerce Howard Lutnick initiated another investigation to determine the effects on the national security of imports of personal protective equipment (PPE) and medical consumables and equipment, also under section 232. Comments for this investigation must be received by 17 October. 

John Manners-Bell, CEO of Transport Intelligence (Ti), said: “Although President Trump’s ambition of re-industrialisation may be understandable, especially in sectors such as PPE, it is unclear whether placing tariffs on imports of such goods will be an effective way of stimulating domestic manufacturing. 

“Chinese manufacturers’ economies of scale are so great that are able to massively undercut foreign competitors, making the development of any domestic production base very difficult and costly.” 

And according to Mr Manners-Bell, imposing these tariffs on their own could just result in higher prices for US healthcare providers and patients.  

Director general of TIACA Glyn Hughes said at the Capsian Air Cargo Summit in Baku last week: “[Trump] is constantly saying that it’s a tax that’s paid by overseas countries. It’s not. There’s no mechanism for that. You don’t have a country paying a collective amount of money on behalf of my combined community of exporters. 

“You will find that people will negotiate that the importer will have to absorb some, but ultimately, the consumer will have to bear the brunt of increased prices,” he warned, and estimated it would take 12 months before tariffs translated into end prices. 

Marco Bloemen, MD of Aevean, added: “The consumer is going to pay for this. The question is, how much can they pay? 

“There’s something to be said around the price elasticity related to the different commodities. We’re already seeing that some goods just are not able to make it, they’re being shipped less. 

“We are going to see shifts that affect our cargo, and some commodities may continue to boom, while others may lose.”