Trade War: American Consumers Will Bear the Tariff Costs

French major newspapers focus on the basic framework of the new US tariff structure, with countries such as Canada, Switzerland, and Brazil seeking to avoid high tariffs. Due to the uncertainty of the global economic outlook, profits of some large French companies have declined significantly.

The New Tariff Framework Is Basically Settled

This week may be the last chance for tariff negotiations. Although all new tariffs imposed by the US on its trade partners will take effect on August 7, some countries are still trying to reverse the decision at the last minute. Le Monde reports that the Swiss government held a meeting today, Monday, to discuss how to act in an attempt to avoid being subjected to a high tariff of 39%. Canada is also seeking negotiations, while Brazil is increasingly frustrated about being subjected to a 50% tariff.

The newspaper cited US Trade Representative Jamieon Grier stating that the new tariff structure is basically settled, with almost no possibility of reduction.

Pressure on American Consumers

Gilles Moec, Chief Economist of AXA Group, told Le Monde in an interview that it will take some time for the new tax measures in the US to affect the real economy, but they are likely to impact the US economy and European economy that are beginning to experience a recession.

Within just a few months, Trump raised the average US tariff on other countries from 2.5% to around 17% at the current negotiation level. Although uncertainty remains high, the initial effects of the tariff shock on the global economy have already begun to show.

Gilles Moec, Chief Economist of AXA Group, believes that the temporary tariff measures in the US have been implemented for four months, and it is too early to draw conclusions because companies in various countries have done a lot of preparation: they stockpiled inventory in the first quarter and are now selling off their stocks.

From the US import price data up to June, if the US absorbs most of the impact of the increased tariffs, import prices have risen. For example, import prices from Canada rose by 0.3% from January to June; import prices from the EU rose by 1.4%, with only one exception: import prices from China fell by 1.6%, and Americans rely on imported goods.

Local US brands are suffering losses, such as Nike losing $1 billion due to tariffs, and General Motors losing $1.1 billion. Therefore, these companies will pass part of the costs on to end customers, raising product prices, so that ordinary American consumers will bear the cost. The Federal Reserve has also confirmed that prices will rise, but the question is when it will start.

In the past 12 months, tariffs have caused the US GDP to decline by 0.75%. A positive note for the US economy is that tariffs have brought revenue to the US government, with customs revenue reaching $108 billion this year, double that of 2024.

Le Monde reported that Trump's tariff measures have severely hit the US automotive industry, even the historic US automotive manufacturers "Big Three" of Detroit - Ford, General Motors, and Stellantis - have not been spared. The tariffs on these companies are almost as high as those of their German competitors.

The three major US automakers are joining forces to lobby Washington in an attempt to alleviate their respective burdens. They were surprised that cars produced in Mexico and Canada by their own companies must pay a 25% tariff, while their competitors, such as cars imported from Europe, Japan, and South Korea, only face a 15% tariff.

Pressure on French Companies

According to the performance report for the first half of 2025, although the profits of large French C40 companies are still growing, profits of large enterprises are declining significantly due to the record-high uncertainty of US high tariffs, especially in industries such as luxury goods, automobiles, and energy.

Libération reported that according to the latest forecast released by the International Monetary Fund on July 29, the global economic growth rate is expected to be 3% in 2025, lower than 3.3% in 2024, and pointed out that the uncertainty index of the global economy and geopolitical relations has reached the highest level since the data was first published in 1990, higher than the first few months of the outbreak of the COVID-19 pandemic.

Since the beginning of this year, multinational companies have been affected by the uncertainty of the economic outlook. Large French companies have started to lay off employees or reduce employee salaries, and many large Western multinational companies are seeing declining sales in China. For example, the sales of the three major luxury groups in France - LVMH, Kering, and Hermes - have dropped by about 20% in the Chinese market. French consumer spending has decreased, while savings have reached record levels.

Original article: https://www.toutiao.com/article/1839526971818250/

Statement: This article represents the views of the author.