SCOTT SIMON, HOST:
It's been over seven months since President Trump enacted those sweeping duties on goods from nearly every country. And one of the questions before the Supreme Court this week - who's paying them? NPR's Juliana Kim joins us. Juliana, thanks for being with us.
JULIANA KIM, BYLINE: Happy to be here.
SIMON: Have we seen retail prices change in the past seven months?
KIM: So far, prices have gone up, you know, for coffee, clothing, furniture - things that are almost exclusively imported. But interestingly, only about 20% of the tariff burden has actually made it to retail prices. That's according to Erica York, an analyst at the Tax Foundation, group that advocates for simplifying the tax code. She told me companies probably had stockpiles of products before tariffs hit, and also, a lot of businesses held off changing prices while there was some uncertainty around tariff rates. But that strategy is beginning to change, and companies are starting to pass higher costs to the consumer. Economists say that's going to become more common in the months ahead.
SIMON: What could costs look like in the next year?
KIM: So there's some different numbers floating around. The Tax Foundation estimates that if tariffs stay in place throughout next year, a household could face an average burden of $1,600. I also asked this question to Kent Smetters, the faculty director at the Penn Wharton Budget Model, and he estimates that existing tariffs could tack on as much as 1% to your average spending. So if you spent $50,000 a year, that's an extra $500. Keep in mind, prices are just one part of the story. You know, tariffs can also lead companies to slow hiring or cut wages, which isn't good news for an already weakening job market.
SIMON: Of course, exit polls from key races this week show that the cost of living and the economy are the biggest concerns for voters. How do you think tariffs have played into that?
KIM: Tariffs have pushed prices higher, but for the most part, the increases have been fairly modest. That being said, many Americans are struggling with inflation fatigue. I spoke to Michele Florio (ph), a paraprofessional in New Jersey, and she says she's held off buying a new car and a mattress because tariffs have made them too expensive, and even her holiday plans are changing.
MICHELE FLORIO: I have been giving baked goods as gifts for 53 years. And now I don't know. I don't know. I don't know what I'm going to be able to do. I'll do some. I certainly won't do as much.
KIM: This week, she voted for Mikie Sherrill, a Democrat, to be the next governor. Part of it had to do with local issues, but Florio says a big factor was choosing a candidate she felt really cared about the cost of living.
SIMON: Now, of course, President Trump says that his tariffs will protect U.S. jobs and products and create revenue. Do we see that happening?
KIM: So our colleague Scott Horsley reported that the Treasury Department is collecting nearly four times as much tariff revenue as it did a year ago, and that equates to tens of billions of dollars. When it comes to American products, though, York from the Tax Foundation points this out.
ERICA YORK: When you demand more domestically produced goods, the prices of those goods rise.
KIM: She says that's already started to happen with some domestic products.
SIMON: And then, of course, at the Supreme Court this week, the justices heard arguments over the president's authority to impose broad tariffs, and a decision could come soon. How much of the administration's tariff policy rests on what the court will say?
KIM: Yeah. You know, a large share of Trump's tariffs are in question. The Tax Foundation estimates that if the justices decide those tariffs are illegal, a household's annual average burden could drop to $400 instead of the $1,600 figure I mentioned earlier. But even if the Supreme Court rules against the tariffs, York from the Tax Foundation says Trump still has other ways to add more.
SIMON: NPR's Juliana Kim. Thanks so much.
KIM: Thank you. Transcript provided by NPR, Copyright NPR.
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