What exactly are tariffs and how will they affect me?

Tariffs are government-imposed duties on imported goods. They are paid by businesses importing goods, so the pain of price hikes will be felt first by US consumers as companies inevitably pass on the impact of higher tariffs.

However, it won’t be long before consumers here start feeling pain too, and in many, perhaps unanticipated, ways.

The trade war will push inflation higher, causing prices to rise in supermarkets and elsewhere. Higher inflation will force the European Central Bank to rethink its strategy and could mean the cost of borrowing increases again, hitting Irish mortgage holders and those looking to buy.

Will my energy bills increase again?

We’re only getting started. Trump’s economic policies could mean US firms manufacture more at home, causing their energy demands to spike, reducing its oil and gas exports. Then, oil and gas prices on already-jittery international markets will jump, which would mean the cost of domestic gas and electricity in Ireland goes up.

Will things improve if the EU imposes reciprocal tariffs?

Likely not. If the EU imposes tariffs on products coming from the US, then prices much closer to home will start to climb.

What products in Ireland will be affected?

Harley-Davidsons and bourbon have attracted attention because both are eternally associated with America. The latter cannot be called bourbon if it is not made in the US. But there are all manner of other products that will be affected.

While Coca-Cola and Pepsi might be quintessentially American, they are typically produced in the markets they serve, so will not be caught up in the tariff net. Other American brands like Budweiser will similarly escape.

The impact on cars and electrical appliances will depend on where they are assembled. Many US brands have manufacturing plants in the EU, so they might also escape.

You might want to stock up on Californian wine and fancy IPAs you like. It is too early to say exactly what will happen as we do not yet have a clear idea of the EU’s plan. If it matches Trump’s tariffs, you will see the Pinots and Zinfandels from Napa disappear or rise in price. It will be the same story for the craft beers from the US.

Are there other products we don’t associate with America?

Sadly yes. The US is a huge exporter of almonds, pistachios, walnuts and peanuts. If they become more expensive or scarcer, the prices when sourced elsewhere will also climb. This will not just affect the actual nuts but also the products made with them.

And then there are soybeans. They are a key ingredient in many products you buy and are used to make cooking oils and animal feed. The US is one of largest exporters of soybeans. If the price of US-sourced soybeans climbs, the impact will be felt up and down the supply chain. It is the same story when it comes to wheat, produced in vast quantities in the US.

The US also produces a significant amount of the world’s fruit and vegetables; avocados and oranges are just two such products. Even if we don’t source them from the US, the disruption of the supply chain will inevitably mean the prices of products sourced elsewhere climb.

How will the tariffs affect the economy?

We’re in the early stages of what might become a full-blown trade war, but the impact on financial markets is clear, with Wall Street recording its bleakest day since the height of the Covid pandemic on Thursday.

While you might not own any shares, your pension fund does. And while a 3 or 4 per cent dip this week will not affect your retirement plans, if things get worse with the economic uncertainty becoming a depression, it will have a serious and seriously detrimental impact on pension funds everywhere.

But this is not inevitable. It is important to remember that we have not reached the doomsday scenario yet. We do not know how the EU will respond or if the talk coming from the White House is bluster leading to new deals.