SAN DIEGO (KGTV) — A slight increase in wages and big increase in prices.
That's what the economic simulation run by UCSD predicts will happen when President Trump’s tariffs go into effect.
But not much would be happening in the next few weeks- they say it might take a year for you to really feel the impact.
“We get a little higher wages, but the prices we pay in supermarkets and other stores would be so much, would rise even faster, and we'd actually lose in real terms,” said Marc Muendler, Chair of the Economics Department, UCSD.
About a 3% loss in incomes is what the simulation is predicting for 2025-- as the new administration brings new threats of tariffs against Canada, Mexico and China.
“So the, the baseline scenario is, what happens to the United States on average, if the foreign countries chose not to retaliate, and we would have a a a slight gain in wages here, about a percent and a half. The problem is that prices would go even faster, would go up even quicker.
And that would mean that we make we suffer a loss of about 3% in our real incomes here,” said Muendler.
Republicans say its a message based in national security.
“If you look at the fentanyl crisis going on in America, in San Diego county, where we had over 700 deaths last year. The drugs coming in from both the southern and the northern borders,” said Corey Gustafson, Former Chairman of the Republican Party of San Diego County.
One of President Trump’s campaign promises was to lower grocery prices.
With these proposed tariffs on America’s biggest trading partners, it looks like the opposite could happen.
“What would you say to San Diegans worrying about higher prices?” I asked.
“I say to San Diegans that we have a securities number one. No matter what we talk about, our economic prosperity in San Diego county, which I know the Trump administration is looking to lower taxes, to be able to, you know, really get our economy going in America and San Diego county. But if you're not safe, you can't economically produce, right?” said Gustafson.
Now - a potential trade war hangs in the balance.
“If they retaliate in symmetry, things can can get pretty sorry,” said Muendler.
Canada threatening a 25 percent tariff right back at the U.S.
“Our wages would not increase much and that alleviate some of the inflation pressure. The other, is some of the goods we usually export to Canada in this case would remain inside our borders,” said Muendler.
But local republicans say
“These are a temporary measure,” said Gustafson.
“What was your first impression of how steep the tariffs were, up to 25%?” I asked.
“Right, this number one, again, it's a national security question. So, the number is just a tool to be able to convince, specifically the Mexican government, the Chinese government, that President Trump is serious about what's going on,” said Gustafson.
“In terms of safety versus grocery prices, we're choosing safety in this option?” I asked.
“Look, you can't go buy groceries if you're afraid to leave your house,” said Gustafson.
If prices go up the way economists are predicting, it'll be hard to avoid the consequences.
Economists say since San Diego does not have a strong manufacturing base, the biggest impact will be on groceries, cars, and assembled goods.
