Business
Trump's proposed tariffs could bring higher prices for groceries, cars and clothing
Steep price hikes could be on the way if President-elect Donald Trump follows through on his pledge to impose sweeping new tariffs on imports from Mexico, Canada and China.
Trump threatened to implement the tariffs on the country’s top three trading partners on his first day back in office, including a 10% tariff on products coming from China. In a pair of posts on Truth Social on Monday, he explained the decision as a way to crack down on illegal immigration and drugs.
“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States,” he said. “It is time for them to pay a very big price!”
But it’s ultimately consumers who could end up absorbing the brunt of those costs. When tariffs are levied against foreign imports, American companies have to pay taxes to the U.S. government on their purchases from other countries; the companies often pass on those extra costs to their customers.
California’s economy could be especially hard hit because of its heavy reliance on trade with China and Mexico.
“This is a bully effort to put everybody on notice,” said economist Chris Thornberg, founding partner of Beacon Economics in Los Angeles. “One of the reasons he uses tariffs is because it’s one of the few places that he actually has some leverage.”
Although Thornberg noted that it’s still a “giant remains-to-be seen” whether and how Trump’s proposed tariffs are implemented, consumer goods across the board could be dramatically affected by the changes.
Here are a few top categories:
Cars and car parts
Mexico was the United States’ top goods trading partner last year, surpassing China.
The country is a major manufacturer of passenger vehicles, light vehicles, trucks, auto parts, supplies and electric-vehicle technologies. Eighty-eight percent of vehicles produced in Mexico are exported, with 76% headed for the U.S., according to the International Trade Administration.
Automakers with manufacturing operations in Mexico include General Motors, Ford, Tesla, Audi, BMW, Honda, Kia, Mercedes Benz, Nissan, Toyota and Volkswagen. GM shares fell 9% and shares of Ford declined 2.6% on Tuesday.
Even before Trump’s latest round of tariff threats, auto-related companies shared how they planned to respond if new duties were levied.
“If we get tariffs, we will pass those tariff costs back to the consumer,” Phil Daniele, chief executive of AutoZone, said in the company’s most recent earnings call. “We’ll generally raise prices ahead of … what the tariffs will be.”
Toys
Last year, China accounted for 77% of toy imports, about 25 times greater than the total value of toy imports from Mexico, the next largest foreign source of supply, according to the National Retail Federation. U.S. producers, meanwhile, account for less than 1% of the toy market.
Earlier this month, the federation released a study that looked at how the tariffs that Trump proposed during his campaign for a second term could play out for consumers.
It found that the proposed tariffs — a universal 10% to 20% tariff on imports from all foreign countries and an additional 60% to 100% tariff on imports specifically from China — would apply to a wide range of toys imported into the U.S., including dolls, games and tricycles.
“Our analysis found that toy prices would face one of the highest increases,” the study concluded. “Prices of toys would increase by 36% to 56%.”
Apparel
The National Retail Federation study also analyzed more than 500 items of clothing including tops, bottoms, underwear, swimwear and socks, and found that prices “would rise significantly” — as much as 20.6%.
That would force consumers to pare spending on apparel. The higher prices and loss of spending power would hit low-income families especially hard, the group said, because low-income households spend three times as much of their after-tax income on apparel compared with high-income households.
“U.S. apparel manufacturers would benefit from the tariffs, but at a high cost to families,” the study said. “Even after accounting for domestic manufacturing gains and new tariff revenue, the result is a net $16 billion to $18 billion loss for the U.S. economy, with the burden carried by U.S. consumers.”
Produce
With Americans already wary of high grocery prices, Trump’s proposed tariffs would increase the costs of several imported fruits and vegetables, said Jerry Nickelsburg, faculty director of UCLA Anderson Forecast, an economic forecasting organization.
The vast majority of U.S. produce imports come from Mexico and Canada, including avocados, cucumbers, potatoes and mushrooms. The U.S. spent $88 billion on agricultural imports from the two countries in fiscal year 2024, which ended Sept. 30.
“Grocery prices will go up because at least some of that tariff will be passed on to consumers,” Nickelsburg said. “If there are no good substitutes, then producers are going to try and pass the whole thing on.”
Household appliances and other electronics
Big-ticket electronic products such as televisions, laptops, smartphones, dishwashers and washing machines — many of which are manufactured in Mexico and China, or made with parts imported from those countries — would probably become more expensive.
The U.S. imported $76 billion worth of computers and other electronics from Mexico in 2023, and more than a quarter of U.S. imports from China consist of electronic equipment.
Shoes
Imported footwear products already face high U.S. duties, particularly those made in China.
On Tuesday, the Footwear Distributors and Retailers of America expressed concern at the threat of new tariffs, saying such policies would make it more difficult for consumers to afford shoes and other everyday essentials.
“We hope President-elect Trump rethinks these tariffs as they relate to footwear, as such measures would place an unnecessary burden on American families when budgets are already stretched thin,” Matt Priest, the president of the trade association, said in a statement. “We urge the President to consider the profound impact these tariffs will have on working families and the broader economy.”
Business
Dickies to move HQ from Texas to Southern California
Dickies, one of the best-known workwear brands in the country, will move its headquarters from Fort Worth to Costa Mesa to be with its sister brand streetwear icon Vans.
The move represents a real estate consolidation by VF Corp., which owns Dickies and Vans as well as outdoorsy brands the North Face, Timberland and JanSport.
The decision marks a rare reversal of a string of business headquarters moves from California to Texas. High-profile departures include Chevron, one of world’s largest oil companies, which said in August it would relocate its headquarters from San Ramon to Houston. Elon Musk has said he will move his companies SpaceX and X from California to Texas.
By contrast in scale, Dickies’ jump from a city known as Cowtown to one once nicknamed Goat Hill will affect about 120 employees, said Ashley McCormack, director of external communications at VF.
“This move allows VF to further consolidate its U.S. real estate portfolio as part of its stated business turnaround strategy,” McCormack said in a statement.
Putting the people who work at Dickies and Vans together is also intended to “create an even more vibrant campus where creativity and best practice sharing can thrive through greater collaboration and connections,” she said.
The move, perhaps including the relocation of employees to California, is expected to be complete by May. Vans’ offices, which are ringed at the top with Vans’ famous checkers, are at 1588 S. Coast Drive in Costa Mesa near the 405 Freeway.
Retail industry observer Dominick Miserandino didn’t see the Dickies move as part of larger trend, calling it instead a decision to optimize the use of property VF owns in Costa Mesa instead of keeping Dickies’ rented headquarters in Fort Worth.
“People are ascribing other things to it,” Miserando, said, when real estate ownership “might be the bigger factor than the angle of how strange it is” to see a company going from Texas to California.
“Clearly you’re making a decision like this for operational efficiency,” said Miserandino, chief executive of industry trade publication RetailWire.
Denver-based VF has faced financial headwinds in recent years with the company’s net revenue declining annually since its 2022 fiscal year.
The company has a revitalization strategy centered on its Vans brand that was down 11% in revenue the second quarter ending Sept. 28, a marked improvement from the prior quarter when the brand was down 22%, executives told investors during its earnings call last month, real estate data provider CoStar reported. The Dickies brand was also down 11% in the second quarter compared to a 14% decline revenue in the first quarter.
“We have a map back to growth for Vans,” VF President Bracken P. Darrell said on the call. He didn’t offer details , but did acknowledge mistakes that occurred after a boom period from 2015 to 2020, when the brand became popular with cultural tastemakers and celebrities, leading to sales among a larger customer base.
“We actually took our eye off to the core youth audience that had been the lifeblood of Vans,” Darrell said. “The brand had to evolve, but rather than continue to respect and serve the youth audience that had built the brand, we only fed the trend that grew it rapidly. We largely withdrew marketing to the core youth, and instead focused on everyone else.”
News of Dickies’ move shook some people in Fort Worth, where the company was co-founded in 1922 by E.E. “Colonel” Dickie and has a high profile as a local business. Dickies Arena is one of the city’s premier entertainment venues for concerts, community events and the annual Forth Worth Stock Show & Rodeo.
“The announcement last week that Dickies is leaving its home base in Fort Worth for a new headquarters in California shocked city leaders and left the brand’s most loyal fans in Texas dumbfounded,” the Fort Worth Star-Telegram reported.
Business
Column: Trump pledges not to cut Social Security. Here are the ways he could breach that promise
Despite all the talk about Donald Trump being a unique political figure in American history, there’s one way in which he has behaved like every other politician on the stump: He’s promised not to lay a hand on Social Security.
With more than 67 million Americans collecting stipends now and hundreds of millions more counting on benefits for their retirement, any threat to the system’s benefits sends a shudder through the nation’s workers. That’s why a promise not to cut benefits has become embedded into American politics for most of the program’s nine decades of existence.
But that hasn’t eliminated the threat of benefit cuts, chiefly from Republicans. Social Security’s internal workings are so recondite and poorly understood by average voters that numerous possible ways of imposing benefit cuts or otherwise harming the program are hiding in plain sight. Trump mentioned some during his recent presidential campaign and attempted others during his last term.
I’m not sure that this administration is going to be in the business of strengthening and protecting Social Security.
— Social Security Commissioner Martin O’Malley
Trump’s fellow Republicans have alluded to yet others. In March, the House GOP caucus released a budget proposal that would eviscerate Social Security.
The caucus members groused about how Social Security has expanded since it was originally signed into law by Franklin Roosevelt in 1935, through “the addition of disability benefits, dependents and survivors benefits, and the incorporation of automatic cost-of-living adjustments.”
Predictably, they don’t mention who was responsible for these changes: Disability was added in 1956, under Dwight Eisenhower; cost-of-living adjustments were enacted in 1972, under Richard Nixon, and went into effect in 1975, under Gerald Ford. All three presidents were Republicans.
The committee called for “modest adjustments to the retirement age for future retirees to account for increases in life expectancy,” raising the retirement age to 69 from the current standard of 67 for new retirees. That’s a benefit cut, and one that would hit low-income and Black Americans harder than others.
Here’s the bottom line: It would be folly to be complacent about what the current political majority might do to Social Security.
“There’s a very serious worry on the horizon,” Social Security Commissioner Martin O’Malley told Al Sharpton on MSNBC last weekend, “because Donald Trump’s policies would seriously reduce the fiscal health of Social Security…. There’s a lot of talk among people around him about all sorts of gimmicks.” (O’Malley is leaving the commissioner’s post to run for the chairmanship of the Democratic National Committee.)
O’Malley is backed up by the Committee for a Responsible Federal Budget, a hive of conservative budget hawks.
Trump’s campaign proposals, the CRFB calculated in October, could cost Social Security’s cash reserves $1.3 trillion to $2.75 trillion over 10 years, hastening the exhaustion of its trust funds by three years, to 2031.
That would provoke a cut in benefits of as much as 33% if Congress fails to act in the interim, the committee reckoned — pointing to Trump’s proposals to eliminate taxes on Social Security benefits, imposing across-the-board tariffs on imported goods and deporting millions of immigrants.
Let’s take a look at the proposal Trump aired during the campaign to eliminate the federal income tax on Social Security benefits.
That’s a crowd-pleaser — after all, who doesn’t love lower taxes? It certainly would mean more take-home pay for those paying tax on their benefits, which is almost everyone except the lowest-income Americans. But it would erode the system’s fiscal stability at a crucial time. Trump couldn’t cut these taxes without congressional consent.
Social Security benefits are taxed on a progressive scale. Typically, , couples with “combined income” of $25,000 to $34,000 are taxed on 50% of their benefits; those with more than $44,000 pay tax on up to 85% of their benefits. (For individuals, the first threshold is $25,000 to $34,000.)
“Combined income” is defined as taxpayers’ adjusted gross income, plus their nontaxable interest earnings and half of their Social Security benefits.
Eliminating the tax on benefits, therefore, could put as much as $4,200 a year back in the pockets of an average benefit-collecting household. Those taxes, however, are paid back to the Social Security and Medicare systems.
For Social Security, which receives the tax on the first 50% of benefits, they’re vital to the program’s revenue stream —$50.7 billion, or 3.75% of all revenues, in 2023. Benefit taxation is projected to yield about $133 billion annually by 2033, accounting for more than 6.5% of the program’s income.
There are only two ways to keep Social Security whole — reduce benefits or increase the payroll tax that provides the largest chunk of income. Taxpayers would have to pay one way or another. And the joy of having more take-home pay now would evaporate when the bills start coming due.
During his first term, Trump and his acolytes took aim at Social Security’s disability insurance program, a favorite target of conservative Republicans. During an appearance on the CBS program “Face the Nation” in 2017, Trump’s budget director, Mick Mulvaney, led the charge.
“Do you really think that Social Security disability insurance is part of what people think of when they think of Social Security?” Mulvaney asked the moderator, John Dickerson. “I don’t think so. It’s the fastest-growing program. It grew tremendously under President Obama. It’s a very wasteful program, and we want to try and fix that.”
Dickerson did not push back. President Dwight Eisenhower, a Republican, had added disability coverage to Social Security in 1956, six decades earlier. Not only was disability not the “fastest-growing program,” it had been shrinking — falling from a peak of 11 million beneficiaries, including disabled workers and their dependents, in 2013, to 10.4 million when Mulvaney was speaking; the rolls would continue to decline, falling to about 8.5 million in 2023.
As for the assertion that disability was “wasteful,” the truth was that the disability error rate, which counts both overpayments and underpayments to beneficiaries, was well below 1% of all benefits, then-Acting Social Security Commissioner Carolyn Colvin advised Congress in 2012.
Trump advanced the attack on disability through his 2020 budget, which aimed to cut disability benefits by $70 billion over a decade. Mulvaney even bragged about hoodwinking Trump into violating his promise not to cut Social Security by telling him the cuts would be in “disability insurance” without revealing that disability insurance is part of Social Security.
Republicans consistently slander disability recipients as malingerers and layabouts. That’s based on the groundless notion that disability is easy to apply for and receive.
The disability certification process is long and difficult. Applicants must show that they have a physical or mental condition that prevents them from earning even $1,550 a month, or $18,600 a year, on their own. The approval process can take months, and even after appeals, only about 40% of applicants end up with benefits.
What’s important about the attacks on disability in Trump’s first term is that claims tend to rise along with the unemployment rate. The reason is that as job opportunities decline in general, the jobs available to the disabled become especially scarce. When desk jobs disappear and all that’s left are laborers’ positions, the opportunities for the physically and mentally challenged become only more limited.
That could be a factor if Trump’s economic policies, such as his intention to jack up tariffs on all imported goods, produce a recession. If that happens, keep your eye on the palaver about disability; it’s almost certain to experience a resurgence.
One tried-and-true method of undermining Social Security is starving the program of administrative resources, a GOP hobby horse for years. “Social Security, today, is serving more customers than ever before with staffing levels Congress has reduced to 50-year lows,” O’Malley told the House Appropriations Committee earlier this month.
The consequences have included wait times on the program’s 800 number that ballooned to nearly an hour, O’Malley said. Of the average 7 million clients who called the number every month for advice or assistance, 4 million “hung up in frustration after waiting far too long.”
The backlog of initial disability determinations reached a near-record of 1.2 million applicants awaiting a decision, some for more than a year. The program estimated that about 30,000 applicants died in 2023 while awaiting decisions.
The crisis in customer service matters because it erodes public confidence that the program will be there for them when their turn comes to claim benefits.
Then there’s Trump’s threat to deport as many as 11 million undocumented immigrants. An estimated 8.3 million unauthorized residents are actually part of the U.S. labor force. Social Security’s dirty little secret is that those who are working are actually improving the program’s fiscal health. That’s because they often submit falsified Social Security numbers to employers, so payroll taxes are withheld from their earnings — but because they don’t have legal Social Security numbers they can never collect benefits.
Furthermore, the mass deportations Trump has promised is likely to debilitate local and state economies. With the laborers needed to pick crops and build houses disappearing, those industries could stagnate, throwing native-born jobholders out of work. Less money will be coming into Social Security’s coffers. The overall loss to the program could be $300 billion to $1 trillion over a decade, the CRFB estimated.
The most dire prospect for Social Security in the coming term may be indifference to its future. Under a Democratic administration and with Democratic majorities in Congress, the prospects were good for the advancement of proposals to broaden and expand Social Security benefits.
Will anything like that happen in Trump’s next term? O’Malley tried to be judicious during his MSNBC appearance, but his opinion was clear: “I’m not sure,” he said, “that this administration is going to be in the business of strengthening and protecting Social Security.”
Business
Sunny but expensive: Thousands more workers left California than arrived during a stretch last year. Here's where they went.
California, home to a rich pool of talent in major industries such as film and tech, has lost thousands of workers to states that have a lower cost of living and other perks, according to a recent report.
The National Assn. of Realtors, which analyzed U.S. census data from the third quarter of 2023, found nearly 87,000 workers flocked from California to other states for new jobs, while the Golden State gained only 69,000 new workers. The group published its findings last month.
Some of the popular destinations for California job switchers: Texas, Arizona, Washington and Nevada.
Even though California’s job market remains strong, high costs of living and a lack of affordable housing, especially in cities such as Los Angeles and San Francisco, play a role in why people accept jobs elsewhere, said Nadia Evangelou, a senior economist for the Realtors association.
“The lack of affordable housing doesn’t just impact homebuyers. It also affects the state’s ability to retain talent,” she said. “This trend is concerning because it reflects the economic strain that high housing costs place on professionals, even those with stable incomes.”
The findings illustrate some of the challenges California faces as it tries to keep workers in the state. Known for its sunny weather and scenic beaches, mountains and deserts, California also grappled with big hurdles in the last year, including the Hollywood strikes and mass layoffs in the tech and media industries. That could also leave workers contemplating whether they should find new opportunities elsewhere in states such as Texas that don’t have an income tax.
California lost more workers than any other state that was part of the analysis with a net loss of 18,485 job switchers.
On the flip side, states in the Southeast and Southwest gained the most workers, the analysis found. Virginia — with an abundance of government contracting, tech and defense jobs — saw a net gain of 7,191 job migrants, more than other states analyzed. Texas, Tennessee, South Carolina and Georgia rounded out the top five gainers.
The analysis by the real estate trade group has some limitations. The census data don’t include Alaska, Michigan, Mississippi and North Carolina. The analysis also focuses on people who quit their current jobs for new ones, not laid off workers.
Larger states have more people moving in and out, so the trade group also looked at another metric to gauge how alluring a state is for people switching jobs. Calculating “the percentage of people moving into a state relative to all job movers in that state,” the group found South Carolina, Maine, Montana and Tennessee were the most attractive states for people who switched jobs.
Stabilizing mortgage rates and more housing supply could help slow down the California exodus, but the state is also competing for talent, Evangelou said.
“This, unfortunately, will continue because it depends on the demand and how much supply we have out there,” she said.
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