Time will tell if President Donald Trump’s promise to place high tariffs on nearly every country in the world will scare many of them into meeting his demands.
But one group those tariffs seem to have already scared is Wall Street.
Between the President’s April 2 tariff announcement and April 10, each of the stock market’s three major indices dropped sharply 3-days-out-of-4. That made for a rocky start to April, not only for stock market investors and 401(k) retirement plan holders, but also for job holders, as a growing chorus of financial analysts predict the tariffs could send more people to the unemployment line due to a recession. A Quinnipiac poll says 7-in-10 Americans think President Trump’s tariffs will do, at least, short-term damage to the economy.
But one Yale expert tells Connecticut Public’s “All Things Considered” that all is not lost for consumers.
“My message is not to panic,” said former Biden administration economist Ernie Tedeschi. He now works as an economist for the Yale Budget Lab. Tedeschi went on to explain why tariffs shouldn't hit Connecticut industries quite as hard, why he thinks the President's tariffs won't work, and what consumers should–or shouldn't–do right now.
Connecticut better positioned to weather any storm
While President Trump’s announcement of a 90-day freeze of so-called “reciprocal” tariffs led to a historic stock market rise on April 9, 10-percent Trump Administration across-the-board tariffs on 185 countries have still gone into effect. As many economists have noted, any tariff the President enacts will manifest as an expense that American consumers and businesses will have to pay.
But Tedeschi noted that tariffs will cause more problems for states with more manufacturing-based economies than Connecticut’s.
“Connecticut has connections to finance and health care and higher education,” Tedeschi said. “I think that services like that—high education, high skill services—will be more insulated from tariffs than goods production will be.”
As Table 44 of Connecticut's 2025 Economic Report of the Governor lays out, 61.4% of Connecticut’s gross state product came from the service sector in fiscal year 2024. In that same time frame, only 11.6% of Connecticut GSP came from manufacturing.
Why tariffs won't revive manufacturing
Connecticut’s manufacturing sector was once more robust before shedding an estimated 140-thousand jobs since 1990. Since 1980, America has shed an estimated 7.5-million manufacturing jobs.
Some of the current anxiety around trade stems from long-standing frustrations in regions that have experienced the most pronounced industrial decline. But Tedeschi said these declines didn’t start with modern trade agreements, like the North American Free Trade Agreement (NAFTA).
“Manufacturing employment as a share of all employment in the United States… that began falling in the 1950s,” he said. “The downward trend before NAFTA looked pretty much the same after NAFTA.”
The issue, he argued, isn’t always about foreign trade deals that can be adjusted with tariffs. In many cases, companies simply moved operations to other parts of the United States.
“Part of what happened was not that auto manufacturing left Detroit to leave the United States entirely,” Tedeschi said. “Part of it was that auto manufacturing left Michigan to go to other parts of the United States.”
Tariffs might help a few, but cost many
Tedeschi argued that tariffs are rarely a solution that serves the greater good.
“Even in the cases where tariffs might be able to help certain narrow segments of manufacturing, it still comes at the expense of the rest of the economy,” he said. “And the overall American economy ends up smaller as a result.”
That’s in large part because American consumers—despite their professed interest in domestic job growth—tend to prioritize one thing above all else.
“Consumers can say all they want that they care about American jobs and full employment,” Tedeschi said. “But, they speak with their wallets.”
He said that desire for cheaper products became abundantly clear during his time in the Biden administration.
“I think we in the Biden administration found out the hard way that consumers really care about prices above all, most of the time,” Tedeschi said. “And I suspect that the Trump administration is going to learn the same lesson that we did.”
Don't buy thinks you don't need
With tariffs already in place, and more potentially coming after the 90-day freeze, some consumers are weighing what to do.
“The number one question that I get from consumers is, ‘Should I buy X right now because tariffs are going up,” he said. “My response to them is, don’t buy that car or that household appliance if you don’t need it.”
But if a major purchase is unavoidable, Tedeschi recommends acting strategically.
“If you do know that you’re going to need a new car or a new washing machine or something, do your homework,” he said.
And, if you have to buy a big ticket item right now, Tedeschi advised that there’s a good reason prices should be at current levels for a little longer.
“You probably have a bit of a grace period before prices go up, especially on durable goods,” Tedeschi said. “Retailers will sell the pre-tariff inventory first… and especially with things like household appliances, it might take a month or two or three before you actually start seeing prices go up on the showroom floor.”
But, when prices for new goods finally do go up because of the tariffs, Tedeschi said the ripple effect will extend to used goods too.
“Used cars, used appliances—they’re all going to go up in price,” Tedeschi said.
