Trade experts tell CNBC that the tariffs announced by President Donald Trump on Wednesday are equivalent to building a trade wall around the U.S. economy of nearly $1 trillion.
With the way tariffs work, the estimated costs of the new tariffs U.S. businesses will be paying is $654 billion a year, according to Trade Partnership Worldwide, and it’s a number that will grow — the figure does not include up to $300 billion more in new tariffs under the International Emergency Economic Powers Act (IEPPA) and Section 232 of the Trade Expansion Act tariffs on steel, aluminum and autos.
American companies will now be on the hook for $1 billion to $2 billion per day, based on estimates using tariff costs paid in 2024.
The U.S. stock market, which saw its worst daily loss since 2020 on Thursday, originally anticipated reciprocal tariffs tied directly to tariff rates on U.S. goods in other nations, but instead the Trump administration devised a formula based on trade deficits which has left many economists confounded and investors surprised by the overall level of tariffs that resulted from the approach.
“If this holds up in court, then we are waking up to a new global economy with a different set of costs than we have known for the last several decades,” said Josh Teitelbaum, senior counsel at the law firm Akin and a former Deputy Assistant Secretary of Commerce during the Obama administration. “Every sector — clothes, shoes, groceries, manufacturing will be touched. It is hard to overstate the impact,” he said.
The market’s biggest and long-time best-performing sector is among the casualties, but the potential damage extends far beyond Apple, which is seen as acutely exposed given its Asian-based manufacturing, and suffered its worst stock drop since Covid on Thursday. According to Cesar Hidalgo, a professor at the Toulouse School of Economics, technology, is a good example of the limitations of the new approach to settling trade scores. Tech giants, now at risk of being targeted by trading partners for tariff retaliation, have been running a big trade surplus with the rest of the world — a $705 billion surplus — as opposed to a deficit.
