Trump unleashes new hell on the economy—even if he pulls a TACO
President Donald Trump issued more insane tariff threats over the weekend, announcing that he will put a whopping 30% tariff on goods from the European Union and Mexico that, if implemented, would cause inflation and pain for American consumers.
The 30% tariff is even higher than the “Liberation Day” tariff rates Trump placed on the EU and Mexico in April but was forced to pause because the stock market cratered after economists warned of economic devastation.
This time, however, stock markets are responding with a collective yawn, as investors assume that Trump will pull a TACO and chicken out of actually implementing the massive tariffs on two of the United States’ largest trading partners.
Yet even if the ultimate tariff rates are lower than 30%, any increased tariffs will be inflationary and hurt lower-income Americans.
“Tariffs are a regressive tax, especially in the short-run,” the Yale Budget Lab wrote in an April analysis of Trump’s original “Liberation Day” tariffs. “This means that tariffs burden households at the bottom of the income ladder more than those at the top as a share of income.”
Indeed, even though Trump has caved and paused some of the tariffs he previously announced, other tariffs have gone into effect that have drastically increased the amount of tariffs businesses are paying for imported goods. For example, even the 90-day “pause” on the Liberation Day tariffs left a blanket 10% tariff on all imports. And 50% tariffs on steel, aluminum, and 25% on car and auto parts are currently in effect.
According to a report from the Yale Budget Lab, with the Trump tariffs currently in place, “Consumers face an overall average effective tariff rate of 20.6%, the highest since 1910.” The Yale Budget Lab said this amounts to “an average per household income loss of $2,800.”
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What’s more, the so-called “deals” Trump has announced that absolve the UK and Vietnam of the original “Liberation Day” tariffs leave those countries with double-digit tariff rates that will cause pain for consumers.
For example, all goods imported from Vietnam will face a 20% tariff—which is lower than the massive 46% tariff rate Trump had initially threatened but is still large enough that American companies who purchase goods from the Asian nation will either have to raise prices or see major cuts to their profit margins that will threaten jobs.
“This will certainly lead to reduced demand for goods, hurting American businesses and jobs,” Steve Greenspon, founder of US home goods retailer Honey-Can-Do, told the Financial Times. “Companies will continue to produce their products in Vietnam, though at a lower pace than prior to the tariffs.”
That is the complete opposite of what voters elected Trump to do. And it’s likely why his approval rating is tanking, and leading to fears that the GOP will lose its congressional majorities in the 2026 midterms.