CT health care, autos, housing and more affected by Trump’s ‘Liberation Day’ tariffs. Here’s how

CT Post – Friday, April 4, 2025
By Kym Soper

World leaders and financial markets across the globe are reeling following President Donald Trump’s new “Liberation Day” tariff policy announced late Wednesday afternoon, as nearly all countries are affected.

How Connecticut consumers and workers will be impacted is less clear. Economists believe that in the short term the policy will be hardly noticable, despite the tumbling stock market early Thursday. Over the next few months and years, however, the tax war meant to bring manufacturing back to the U.S. could swing the local economy into a recession, some predict, while others say it will bring financial stability and wealth back to these shores.

Under the plan starting April 5 all imports to the U.S. are subject to a 10% tariff, with even higher rates being levied against nations the administration believes has taken advantage of this country. Among them are a 26% duty on India, 24% on Japan, and 20% on the European Union. Those go into effect April 9. China, which was handed a 34% tariff on Wednesday was previously hit with a 20% tax imposed by Trump over the fentanyl crisis, bring the base tariff rate on imports from that country to 54%.

Trump said the import taxes announced Wednesday, ranging from 10% to 49%, would do to U.S. trading partners what they have long done to the U.S. Some countries on the list have promised retailiation in the form of reciprocal tariffs on goods exported from the U.S.

Regardless, Connecticut residents can expect higher prices in the future, particlularly in textiles, computer components, technology systems, building materials, health care, vehicles and replacement parts, experts say.

Here’s what to look for:

Retail shopping

Tariffs have already started to impact consumers’ budget bottom lines and will likely continue to do so, reports Yale University’s The Budget Lab. Since the start of 2025, the average decline in real disposable income per household is about $3,800, and price levels have changed by 2.3%, The Budget Lab reports.

Initial reports from the “Liberation Day” tariffs taking effect indicate that consumer prices have risen about 1.3%, which equates to the loss of $2,100 in purchasing power per household, according to Yale’s report issued April 2. These estimates are based on 2024 dollars and assumes the Federal Reserve does not make a policy change in reaction.

Trump’s tariffs will impact all consumers but will be felt more acutely by households with the lowest disposable incomes. “Annual losses for households at the bottom of the income distribution are $1,700,” The Budget Lab states.

Trucks and automobiles

Among the new tariffs are a 25% levy on on all new cars imported into the United States. That is expected to add between $4,000 and $12,000 to the purchase of a new vehicle, according to a report released last month by the National Automobile Dealers Association. What isn’t clear at this point, according to some Connecticut new car dealers, is how much of the additional costs automakers will look to pass on to consumers.

Tariffs are also expected to impact the costs of used cars and repairs to older vehicles. With prices increasing on new vehicles, demand for used cars is expected to be the main driver of those costs, while many look to hang onto their trucks and autos longer than they may have a year or two ago.

Because of the 25% tariffs imposed on Canada and Mexico in March, replacement car parts are expected to increase as well.

Manufacturing

Given its reliance on international supply chains, Connecticut’s manufacturing sector could be acutely affected by the new tariffs, officials say.

At an event on Thursday, Gov. Ned Lamont expressed concerns about the new levies’ potential impact on some of the state’s largest manufacturers, including jet-engine maker Pratt & Whitney, based in East Hartford and Middletown.

“Pratt & Whitney — they import billions of dollars of parts from Canada,” Lamont said. “It’s not going to make their jet engines any cheaper, is it?”

Pratt & Whitney officials declined to comment Thursday on the governor’s concerns about tariffs affecting the company.

Lamont added that Trump was being “incredibly shortsighted, declaring a trade war with the rest of the world, allies and enemies alike.”

Given that Trump made tariffs a key part of his 2024 campaign, manufacturers have had months to prepare. In response to the initial tariffs on goods from China last month, officials at New Britain-headquarters toolmaker Stanley Black & Decker said the company would adapt, in part, by further reducing its operations in China.

“We went through tariffs in the first President Trump administration. We figured out how to navigate it back then. We feel like we are well prepared to mitigate this again,” Stanley CEO and President Donald Allan Jr. said during the company’s latest earnings call, on Feb. 5. “It will create a modest disruption for periods of time in the short term. But a reminder to everybody is that, back seven or eight years ago, about 40% of what we sold in the U.S. came from China. And now we’re down closer to a number that’s in the mid-teens, around 15%.”

Housing costs

Trump’s latest round of tariffs are going into effect even as the Connecticut General Assembly wrestles with how to convince developers to build more new houses and apartments. The state is facing a shortage of more than 100,000 housing units that has kept home-buying prices and rents high.

Officials with the National Association of Home Builders said Wednesday that the complexity of tariffs — including the reciprocal variety — make it difficult to estimate the impact on housing. The White House exempted lumber, which comes almost exclusively from Canada, in the initial round of tariffs. Still, officials with the NAHB said the tariffs “will undoubtedly raise some construction costs.”

Homeowners and buyers could conversely see one positive boomerang effect in any economic slowdown, however — a more-aggressive pace of interest rate cuts by the Federal Reserve. That could help put downward pressure on mortgages and home-equity loans.

A 30-year mortgage averaged 6.64% interest rate this week, as calculated by loan guarantor Freddie Mac. That’s slightly above its level in August 2008 on the eve of the collapse of the mortgage lending market that year. Rates would drop 3 percentage points during the resulting Great Recession, helping set up the second longest expansion of U.S. home sales dating back to the early 1960s.

“I would tell you — with a very strong conviction — that I do think that tariffs will ultimately lead to increases in construction costs, which will make it harder to build and negatively affect affordable housing,” said Jon Gitman, a Florida-based commercial lender that recently extended a $27 million loan to refinance a mortgage on The Millennium apartments in Hartford next to Dunkin’ Park. “I think you’re going to need to see a really big drop in short-term rates before it pulls [mortgage] rates down.”

Health care

The medications and medical devices that Americans use every day may not come with “Made in China” or “Made in India” stickers, but Trump’s new tariffs will still have a major impact on the health care and life sciences industries, experts say.

Pharmaceutical products were specifically excluded from the tariffs announced on Wednesday. But Trump’s fact sheet on the actions stressed the need to rebuild the U.S. drug-manufacturing base, and future tariffs on raw materials are considered likely. Earlier tariffs imposed on steel and aluminum imports will also raise prices on medical devices, surgical instruments, crutches and prosthetics, according to the American Hospital Association.

The tariffs announced so far will add $63 billion in costs a year to the pharmaceutical, life science and medical device industries, according to consulting firm PwC. Proposed tariffs on foreign-made drugs and drug materials could boost the total to $76 billion.

“The (pharma) industry could face immediate adverse impacts given its heavy reliance on foreign countries for raw materials and manufacturing,” PwC said in a report last month, citing effects like higher drug prices and supply chain disruption.

Supplies in daily use at Connecticut hospitals are also likely to see price increases as the tariffs take hold. China, subject to wide-ranging tariffs prior to Wednesday’s announcement, makes most of the N95 and other respirator masks, two-thirds of the non-disposable face masks and 94% of the plastic gloves used in health care, according to the American Hospital Association.

Higher costs for foreign-made medicines and equipment comes at a time that Connecticut hospitals are already facing surging expenses for labor and supplies due to inflation and lingering impacts of the COVID-19 pandemic, said Paul Kidwell, senior vice president for policy at the Connecticut Hospital Association.

The cost of medical supplies alone at Connecticut hospitals grew by 6.8% from fiscal 2022 to 2023, according to a report by Kaufman Hall. Drug costs also grew by 10%, adding to a $1 billion surge in operating expenses for state facilities in the same period.

New import costs due to tariffs will add to hospital expenses and result in higher prices for insurers and patients, Kidwell said.

“We buy a lot of goods, pharmaceuticals and other supplies,” Kidwell said. “Tariffs increase the cost of the goods … that cost gets passed down the line.”

Higher costs from tariffs add to the stress on a hospital sector that is already facing proposed federal cuts in Medicaid and grants, said Kevin Holloran, senior director and analyst for Fitch Ratings. That could result in layoffs and service cutbacks at hospitals still recovering from pandemic losses, he noted.

“If your inputs go up, and I think they will with tariff increases, they will have to find ways to reduce their expenses,” Holloran said. “I expect management teams will take the appropriate actions.”

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