
As President Donald Trump moves forward with plans to impose tariffs of 25% on imports from Mexico and Canada, and 10% on goods from China, San Diego’s businesses and residents are bracing for significant economic impacts.
A recent economic simulation conducted by the University of California, San Diego (UCSD) predicts that while wages may experience a slight increase, the rise in consumer prices is expected to outpace wage growth. Marc Muendler, Chair of the Economics Department at UCSD, explained, “We get a little higher wages, but the prices we pay in supermarkets and other stores would rise even faster, and we’d actually lose in real terms.” The simulation forecasts a 3% loss in real incomes for 2025, as the new administration enacts tariffs against major trading partners.
Economists warn that the tariffs could lead to higher prices for a range of goods, including groceries, automobiles, and electronics. Dr. Alan Gin, an economics professor at the University of San Diego, stated, “When prices go up, your real income, which is income adjusted for inflation, is going to decline, so people will not be able to afford to buy as much if prices go up due to these tariffs.”
Governor Gavin Newsom has been vocal in his criticism of the proposed tariffs, labeling them a “betrayal” of American consumers and the USMCA trade deal. During a visit to the San Diego-Mexico border, Newsom emphasized the potential negative consequences, including job losses and increased inflation, particularly affecting small businesses and the agricultural sector in California.
As the situation develops, San Diego’s community is closely monitoring the potential economic repercussions, hoping for strategies that will mitigate adverse effects on both businesses and consumers.