When Chappelle-Nadal first explained how a trade war could hurt working class individuals the most, the point seemed subtle. Now that tariffs could be imposed on Chinese goods that consumers need, it is starting to become more clear.

In May Michael Tanner, senior fellow at the Cato Institute, reiterated the point. Tanner suggested the trade war could cost an average of $767 for each American family:

Trump’s insistence to the contrary notwithstanding, most of the cost of tariffs is paid by American consumers (through higher prices), not by the countries being sanctioned. For instance, it is estimated that the president’s latest round of tariffs on China will cost the American family an average of at least $767.

But that cost does not fall equally on poor and rich alike. To state the obvious, $767 means a lot more to a poor family struggling to pay its bills than it does to a wealthy one. Moreover, tariffs are more likely to fall on goods and services that the poor depend on, daily necessities of which they often lack a reserve supply.

This issue could become a point of contention as the trade war lingers on. If rising prices from tariffs cause spending and GDP to fall, economists and politicians could become more critical of the trade war.


Headwinds from the trade war could hurt PCE growth and GDP in the second half of 2019. Another rate cut may not help. Investors should avoid cyclical names and highly indebted companies that need consistent cash flow to service debt.



Please enter your comment!
Please enter your name here