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<\/p>\nTariffs, including the new 15% rate for most imports from the EU, would raise consumer prices by 1.8% in the short run, according to the Yale Budget Lab. Here’s where shoppers could see higher prices.<\/p>\n
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Trump\u2019s 15% EU tariff may raise prices on cars, drugs and luxury goods<\/p>\n
President Donald Trump\u2019s trade deal with the EU may raise prices on cars, pharmaceuticals and luxury goods.<\/p>\n
Imported cars, pharmaceuticals, apparel and more could grow more expensive in the months to come as the United States imposes a 15% tariff<\/a> on most imports from the European Union.\u00a0<\/p>\n Analysts have labeled the agreement, announced July 27, as a win for President Donald Trump<\/a>, whose administration had been working to complete deals by a self-imposed Aug. 1 deadline. U.S. stocks opened mostly higher on July 28<\/a>, with the S&P 500 and Nasdaq reaching record highs after Trump announced a tariff far below the 30% rate threatened earlier in the month.\u00a0<\/p>\n But for U.S. consumers, even the reduced tariff is expected to spur higher prices. The Yale Budget Lab estimates that Trump’s tariffs, including the new rate for EU imports, would raise prices by 1.8% in the short run<\/a>, the equivalent of an average household income loss of roughly $2,400.\u00a0\u00a0<\/p>\n While the increase may sound insignificant, \u201cthe Federal Reserve\u2019s inflation target is 2%. So we’re talking about almost a year\u2019s worth of inflation above and beyond the inflation that we would\u2019ve gotten anyways,\u201d said\u00a0Ernie Tedeschi, director of economics at the Yale Budget Lab. \u201cSo that\u2019s meaningful.\u201d\u00a0<\/p>\n Here are some of the sectors that could see higher prices in the months to come: \u00a0<\/p>\n European cars\u00a0<\/p>\n Automobiles, one of the EU’s largest export sectors, will likely see some of the most noticeable price hikes, according to Gary Hufbauer<\/a>, a nonresident senior fellow at the Peterson Institute for International Economics.\u00a0<\/p>\n While the 15% tariff is a relief from the current 27.5% rate, Hufbauer said the auto industry\u2019s margins are thin enough that EU companies won’t want to absorb the higher cost.\u00a0<\/p>\n \u201cI suspect European auto prices sold in the U.S. will go up probably at least 10%,\u201d he told USA TODAY. \u00a0<\/p>\n German Association of the Automotive Industry<\/a> President Hildegard M\u00fcller warned the 15% tariff could cost the German automotive industry \u201cbillions annually.\u201d\u00a0Already, Volkswagen\u00a0has trimmed its full-year sales forecast after reporting a $1.5 billion hit from tariffs<\/a> over the first half of the year. \u00a0<\/p>\n Automobile price hikes will likely vary across European makes and models, according to Tedeschi, since many already operate factories in North America. That means trade deals with Canada and Mexico could also influence pricing.\u00a0<\/p>\n \u201cConsumers should keep an eye out for rising prices for European car imports, but they should not assume that all European brands are going to go up in price because of how complicated the supply chain is,\u201d he said, adding that he expects to see price increases tied to the new EU tariffs play out this summer and fall.<\/p>\n