President Donald Trump’s latest trade deal with China may look like a diplomatic win, but for the American middle class, it comes with hidden costs.
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While tariffs are being reduced in exchange for promises from Beijing, households could still face higher prices, disrupted supply chains and reduced job growth.
Here are four reasons Trump’s trade deal with China is bad news for the middle class and what families can do to protect their finances.
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Higher Consumer Prices Despite Tariff Relief
Even as the U.S. and China approach an August trade deal deadline, prices on many consumer goods remain elevated, and middle-class households continue to feel the strain.
Some experts argue that the new tariffs may not drastically shift average import prices. However, middle-class families are more likely to feel the impact in specific categories, such as electronics, tools and household goods.
“U.S. companies scrambled to import as many goods as possible to stockpile before new tariffs were fully implemented, mitigating the immediate impact of tariffs on prices,” said Bryan Riley, Director of the Free Trade Initiative at the National Taxpayers Union.
Riley said that since imports from China account for just 13.2% of total U.S. imports, increases in the price of specific Chinese goods may not push up the overall import average. However, they can still significantly affect middle-class budgets for everyday items.
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Erosion of Real Incomes and Job Losses
An analysis by the Federal Reserve Bank of San Francisco warned that Trump’s trade measures could cut national real income by around 0.4%, while losses in services and agriculture might offset job gains in manufacturing.
“What’s pitched as economic growth is actually a slow bleed: Manufacturing jobs won’t magically return, and small businesses relying on predictable import costs are about to face more whiplash,” said Patrice Williams Lindo, CEO of Career Nomad.
“Wages stay stagnant while everyday costs climb. And here’s the kicker — there’s no workforce investment baked into this deal. That means your job security, benefits and opportunities to grow could evaporate, especially if your industry leans heavily on exports or global sourcing.”
Volatile Markets and Supply Chain Instability
Although the China deal eased recession fears, experts said that uncertainty around ongoing tariffs still disrupts manufacturing and logistics. Businesses may hold back investment or retool supply chains, raising costs for middle-class consumers and slowing hiring.
For example, uncertainty remains one of the most significant threats to economic momentum, particularly for businesses making long-term decisions.
“The real issue is that this deal doesn’t create clarity. It reinforces an environment of ‘wait and see,’ Robert Khachatryan, CEO and founder of Freight Right. “That’s not how you build confidence in the economy.”
Khachatryan added, “You can’t expect small and midsize businesses, who employ a huge portion of America’s middle class, to plan for the future when they’re stuck playing defense against the next round of tariffs.”
Missed Middle-Class Priorities in the Deal
While the latest Trump-China deal touts manufacturing wins, some economists warn it overlooks the broader economic trade-offs that directly affect the middle class.
“We have an experiment,” said Michael Froman, president of the Council on Foreign Relations, in a recent interview on Conversations with Jim Zirin. “In 2018, President Trump imposed 25% tariffs on steel. Seven years later, we have 1,000 more steelworkers, but 75,000 fewer workers in manufacturing sectors that relied on steel, and a 30% drop in steel sector productivity.”
This kind of trade-off may deliver political wins, but it overlooks how tariff-driven policies ripple into everyday life for the middle class.
“Over time, reduced job stability in trade-sensitive sectors and a slowdown in wage growth may exacerbate economic insecurity for families already stretched thin by inflation and debt servicing costs,” said Jean-Baptiste Wautier, a private equity CIO and World Economic Forum speaker.
How To Protect Your Budget
Middle-class families can shield themselves by using rewards or rebate programs and strategically stockpiling essentials before potential tariff increases.
Julian Merrick, founder and CEO of Supertrader, a fintech firm focused on global markets, recommends starting with a small emergency fund, even setting aside $200 to $300, which can help families avoid debt when unexpected expenses arise.
“It also helps to cut back on spending in categories where prices are rising — things like tech, clothes or imported goods,” Merrick said. “Families should avoid taking on new high-interest debt right now, especially for non-essentials. And for those with investments, make sure the money is spread out across different industries.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 5 Reasons Trump’s Trade Deal With China Is Bad News for the Middle Class
