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and they won't all be good...as shown in this AI summary...

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AI Overview

The effects of new tariffs are expected to come slowly, but build over time, rather than appearing as a sudden, large economic shock. The initial, immediate impacts are often softened by businesses absorbing costs or using existing inventory, but the full effects, including higher consumer prices and slower economic growth, will emerge gradually.

Factors delaying the full impact of tariffs

Existing inventory: When tariffs are announced, many businesses will import and stockpile extra goods before the new, higher duties take effect. For durable goods like appliances or machinery, this can delay price increases for months.

Company absorption of costs: Many companies initially choose to absorb the higher costs of tariffs to maintain market share and avoid unsettling customers. However, this strategy is not sustainable, and costs are passed on to consumers over time as profit margins shrink.

Gradual replenishment of inventory: As businesses use up their pre-tariff inventory and restock with goods at the new, higher costs, price increases slowly work their way through the supply chain. Walmart, for example, has noted that its costs are increasing weekly as it replenishes inventory at post-tariff prices.

Uncertainty about policy: Frequent changes and pauses in tariff policies can cause companies to delay major decisions on pricing, investment, and hiring. Businesses may adopt a "wait and see" approach until they have more clarity on where tariffs will eventually settle.

Market anticipation and shifts: Countries and businesses may seek to bypass tariffs by altering their supply chains. This could involve shifting production to non-targeted countries or increasing trade with nations outside the US.

Short-term vs. long-term effects

Near-term (first several months)

Initial mild price increases: While overall inflation may appear tame at first, prices for heavily affected imported items like toys, furniture, and certain appliances may rise sooner.
Decreased business and consumer sentiment: Economic uncertainty can cause both businesses and consumers to postpone major purchasing and investment decisions.

Market volatility: Stock and bond markets have shown volatility in response to tariff announcements.

Medium- to long-term (next 1 to 2 years and beyond)

Higher consumer prices: As businesses exhaust existing inventory and can no longer absorb costs, higher prices are increasingly passed on to consumers. Economists predict this will reduce consumer purchasing power.

Slower economic growth: Higher prices from tariffs act as a tax, reducing consumer spending and business investment. Analyses by organizations like the Congressional

Budget Office and Tax Foundation predict that recent tariffs will reduce the size of the US economy.

Shifted supply chains: Over the longer run, companies will make more permanent changes to their global supply chains to mitigate tariff costs, which is a complex and lengthy process.

Retaliation from other countries: Tariff threats and implementation often lead to retaliatory tariffs from other countries, further disrupting global trade and potentially harming US exports.

Reduced innovation: By protecting domestic industries from competition, tariffs may decrease the incentive for companies to innovate and improve productivity.
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