The latest episode of “Talking Trade” features Laura Baughman, senior fellow with Trade Partnership Worldwide, on evolving U.S. trade policy.
Baughman, who has worked with a variety of American businesses spanning multiple sectors, says tariffs are creating major uncertainty and confusion for companies. She’s a senior staff member for the Washington, DC-based international trade and economic research firm.
“Nobody knows what to do, nobody knows who’s going to get hit and with how much and when,” she said. “And so onsequently, all of this uncertainty is pushing a lot of costs onto companies, even though there was earlier this year and until really recently, no extra tariffs had been imposed yet.”
Still, she said many businesses were driven by uncertainty to stock up on imported supplies, taking a financial hit to store them in warehouses in anticipation of higher costs to come. Others are putting off investment decisions, even domestically.
“Economic research has shown that this uncertainty is equivalent to a tariff in and of itself, sometimes on the order of 8% to 10%, depending on the product,” Baughman said, adding “the ability of companies to bear these costs, of course, depends enormously on whether they’re big companies or little companies.”
She shares details on how larger companies are addressing these challenges, while smaller ones are “taking it on the chin.”
Baughman said she expects much more tariff-related price increases on consumer prices as amassed inventories are diminished over time, likely in the fall or winter.
“We’re also hearing tariff impacts on sectors you wouldn’t think, like car insurance,” she said. “Some car insurance companies, we’ve been told, are raising their premiums because it costs more to get a car repaired, because brake parts … have tariffs on them now, if they’re imported.”
Meanwhile, spending on entertainment and food is “starting to slow” as consumers pull back amid the uncertain environment, she said.
Talking Trade is hosted by E.M Wasylik Associates Managing Director Ken Wasylik and M.E. Dey & Co. President and Managing Director Sandi Siegel.
