Dave Ramsey Says Trump’s Tariffs Will Impact the Economy: ‘Companies Do Not Eat Taxes’
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Dawn Allcot
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Amber Barkley
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While the implementation of President Donald Trump’s plan for worldwide trade tariffs is still in question, finance experts Dave Ramsey and Ken Coleman of Ramsey Solutions have already discussed the effect the tariffs could have on the economy in response to a Ramsey Show viewer question.
“American companies will have to pay the tariff [on goods imported from other countries.] … There’s no questions that tariffs are passed on from American companies to American consumers,” Coleman said. “It’s a long-held economic strategy. Sometimes it works, sometimes it doesn’t.”
“You will pay more,” Ramsey agreed. “No question about it. … Companies do not eat taxes. … Corporate taxes are built into the price of the item.”
Will Tariffs ‘Crash the Economy?’
Beyond increasing the cost of goods, Ramsey didn’t voice general concerns about tariffs causing a widespread economic crash. Rather, he emphasized that tariffs can play a role in reducing U.S. trade deficits with countries like Vietnam.
Ramsey explained that countries like Mexico have had tariffs on U.S. imports for years. He cited the example of a friend building a house in Cabo, Mexico. “Mexico adds 33% … so a $1,000 item becomes a $1,500 item — that’s today and has been that way for years,” Ramsey said. “Did it crash either economy? No. Did it slow down the number of people that do business in Mexico? Yes.”
Will Tariffs Hurt Your Wallet?
While the U.S. Secretary of Commerce Howard Lutnick emphasized reshoring manufacturing as the primary goal of the tariffs, as previously reported by GOBankingRates, many experts believe the tariffs will also function as a consumption tax, hurting those in the lower income brackets the most.
Unlike Ramsey’s friend — who can likely afford not just a home in Cabo but the added tariffs on his kitchen fixtures — many lower-income Americans will struggle with increased prices caused by tariffs.
Other Factors Will Affect the Economy
Ramsey pointed out, “Economics is not as simple as one variable.” Taxes and inflation will also play into the affordability of consumer goods and the greater economy.
“If the president also extends his tax cuts, which will expire later this year, that would help the American consumer in lowering your costs,” Coleman said. “You keep more of your paycheck.”
However, those in the lower income tax brackets may not benefit as much from extended tax cuts, especially if they make less than the standard deduction.
Sound Financial Advice
Coleman offered advice for those in the middle-class who may worry about increased prices: “If you’re debt-free … even though it’s never fun to have [the] costs of your household goods … go up, you can weather that storm.”
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