Spending

More tariffs are on the way: Prepare to pay more for cheese, wine, and whisky

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Ongoing trade disputes between the United States and other countries are likely to mean that consumers will pay more for all kinds of goods in the final months of 2019, including food, cars, and electronics.

Two new rounds of tariffs are slated to go into effect in the coming weeks:

  • The U.S. is set to impose new tariffs on $7.5 billion worth of goods from the European Union, after arbitrators from the World Trade Organization (WTO) approved those levies Wednesday. The 25% tariffs, which go into effect October 18, will target a range of goods from countries like France, Germany, Spain, and the U.K, on products including aircrafts, alcoholic beverages, cheese, pork products, and frozen meat.
  • Consumers can also expect higher prices due to another round of tariffs on Chinese goods scheduled to begin October 15. These will push the duties from 25% to 30% on products including furniture, handbags, and luggage.

Tariffs are taxes placed on imported products. Companies importing affected products pay the tariff, and in turn must often charge higher prices for the products to cover the higher importing costs. So individual Americans generally end up paying higher prices.

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How the pain of paying can affect your spending

"At the end of the day, the tariffs are eaten by ... the American consuming public," Richard Ebeling, an economics professor at The Citadel in Charleston, South Carolina, told Grow earlier this year, when the U.S. raised existing tariffs from 10% to 25% on $200 billion worth of Chinese goods.

There could be still more tariffs on the way, too. The U.S. is still deciding whether or not to implement import taxes on foreign automobiles, which could add an additional 25% to the price of vehicles produced in Europe and Japan.

How tariffs are affecting consumers

Even without the new round of tariffs on European goods, the trade war is already costing Americans hundreds, and maybe even thousands, of dollars. A family of four could pay an extra $767 to $2,389 each year for the products they already buy, according to a February study from Trade Partnership Worldwide.

In June, the research firm warned that additional tariffs "would result in prices higher than many consumers would be willing to pay."

The E.U. is likely to respond with tariffs of its own, and as a result consumers can likely expect to pay more for groceries and perhaps airline tickets.

You may feel the impact of these tariffs as your spending ramps up in the fall. A quarter of all retail sales occur during the holiday shopping season, according to Deloitte. Last year, the average household expected to spend $86.79 on Halloween, and $1,007.24 on the winter holidays, according to the National Retail Federation, while the American Farm Bureau puts average spending on Thanksgiving dinner at $48.90.

Given that there hasn't been much progress in settling these trade disputes, consumers should plan for price hikes. That may mean cutting your spending in advance or otherwise retooling your budget to anticipate a costlier shopping season. You may also want to hold off on any bigger purchases, like appliances, as they may jump considerably in price, or consider buying them secondhand.

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