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Though extreme trade tensions eased somewhat after the US and China agreed to a temporary reduction in tariffs, Fred Hochberg, former chair of the Export-Import Bank, said the Trump administration’s tariff policies are set up to hurt US consumers.
“I think the tariffs are going to hurt us in the long run,” Hochberg said on Yahoo Finance’s Financial Freestyle (see video above or listen below).
Hochberg was the longest-serving chairman in the history of the Export-Import Bank, which was established in 1934 to help provide financing to foreign buyers purchasing US goods. He also served under the Clinton and Obama administrations.
According to Hochberg, tariffs are a tax paid by American consumers and companies, and they are “raising the cost for everyday Americans.”
In April, the first month that many of Trump’s tariffs were in effect, consumer prices rose less than expected overall, though some areas, such as furniture, appliances, and toys, saw prices creep up at a faster pace.
Read more: What Trump’s tariffs mean for the economy and your wallet
Some economists, however, likened the report to the calm before the storm, explaining that it takes time for tariff effects to filter through the economy.
“We really haven’t seen the full impact of tariffs come through yet,” RBC Capital Markets economist Carrie Freestone told Yahoo Finance after the report. “It’s going to be a while for firms to change their behavior and for us to start to see an impact on core goods prices.”
President Trump has stated that one goal of his tariff policies is to bring more manufacturing jobs back to the US, even if it brings about some pain in the form of price increases.
But even with tariffs applied, achieving that could be difficult, Hochberg said.
Though the US is the world’s second-largest exporter of goods and services, Hochberg estimates that less than 10% of the country’s workforce works in manufacturing, and only half of that labor force is directly involved in production.
Hochberg argued that there are other ways to encourage US manufacturing in select sectors that wouldn’t be as harmful to Americans, like offering tax incentives or reasons to move manufacturing back to the US.
“A lot of things we import, we don’t make here anymore, nor do we want to make here anymore,” he said. “We’re not making sneakers and sweatshirts and T-shirts like that, so it’s not clear why we would want to go that route. It makes us less competitive.”
Hochberg also said tariffs are a major problem for intermediate goods like aluminum and steel, even if they are made in the US. The 25% tariff on foreign steel not only makes it more expensive to import those products, he said, but it may also enable US manufacturers to raise their prices alongside the tariffs.
“So there’s no bargain by buying US-made steel,” he said. “They just simply got an opportunity to raise their prices 25% because they don’t need to undercut foreign competition.”
Though Hochberg doesn’t see tariffs returning to levels over 100%, he does expect them to remain at a higher level than before Trump took office. He stated that US consumers are estimated to spend “$1,000 to $1,500 per year” more on goods as a result of the tariffs.
“We’ve benefited by the trade going back and forth,” Hochberg said. “It shouldn’t be open and free, but we have benefited by that. And I think that’s at risk now.”
Every Monday, Financial Freestyle host Ross Mac talks with key guests to discuss their wealth-building journeys and what it takes to build a lasting financial footprint. You can find more episodes on our video hub or watch on your preferred streaming service.
