NY's Hochul Says Tariffs Having 'Cataclysmic' Effect

Governor Kathy Hochul of New York has sounded the alarm, declaring that the recent wave of tariffs is having a "cataclysmic" effect on the state's economy. The tariffs, imposed by the U.S. government, are causing a ripple effect that is shaking the foundations of New York's economic landscape. Let's dive into the details and understand the gravity of the situation.



The Tariff Tsunami

The tariffs, which are essentially taxes on imported goods, are driving up the cost of raw materials and finished products. This is leading to a surge in consumer prices, which is a nightmare for New Yorkers who are already grappling with a high cost of living. The Atlanta Fed’s research indicates that additional tariffs on imports from China, Canada, and Mexico could raise consumer prices on everyday retail purchases by 0.81%. This is a massive blow to the purchasing power of New Yorkers.

The Manufacturing Sector Under Siege

The manufacturing sector in New York is particularly vulnerable. The tariffs on steel and aluminum are causing a 30 to 40 basis point increase in core inflation in 2025, as projected by Deutsche Bank Research. This increase in input costs is filtering through to various goods, including autos and canned drinks, and even to goods-intensive services like motor vehicle repair and segments of the food industry. The manufacturing sector is under siege, and the ripple effects are being felt across the board.

Retail Sector in the Crosshairs

The retail sector is also in the crosshairs. Tariffs on imported goods are leading to higher consumer prices, reducing purchasing power. The retail sector, which includes a wide range of goods from electronics to clothing, is at risk. The Atlanta Fed’s research indicates that additional tariffs on imports from China, Canada, and Mexico could raise consumer prices on everyday retail purchases by 0.81%. This increase in prices can significantly impact consumer spending and retail sales.

The Global Supply Chain in Chaos

The tariffs are causing chaos in the global supply chain. Countries affected by tariffs are responding with retaliatory tariffs, creating trade conflicts that can escalate into extensive trade wars. These disputes are negatively impacting global trade flows, disrupting supply chains, and creating uncertainty that hampers business investments and economic growth globally. New York, which is heavily reliant on international trade, is feeling the heat.

The Economic Relationships Under Strain

The tariffs are straining international relations, potentially damaging long-term economic partnerships and cooperation. For New York, which is a global financial center, this can lead to reduced international investment and slower economic growth. The economic theory around global free trade is quite elegant. According to the comparative advantage theory, the production of goods and services occurs in places with the lowest cost of production. Therefore, the ultimate result of genuinely free trade is enlarging the global economic pie for all participants, including developing countries that get a slice of that pie by taking advantage of their lower relative input costs. However, tariffs can disrupt this free trade environment, leading to economic inefficiencies and tensions.

The Bottom Line

Governor Hochul is right to sound the alarm. The tariffs are having a cataclysmic effect on New York's economy. The manufacturing and retail sectors are under siege, the global supply chain is in chaos, and economic relationships are under strain. The tariffs are driving up consumer prices, reducing purchasing power, and causing a surge in input costs. The situation is dire, and immediate action is needed to mitigate the damage.

What You Need to Do

You need to stay informed and take action. The tariffs are having a real impact on your wallet and your investments. You need to diversify your supply chains, invest in innovation and efficiency, and advocate for free trade agreements. You need to demand that your representatives in Washington take action to mitigate the damage caused by these tariffs. The future of New York's economy is at stake, and you need to be part of the solution.



The tariffs are having a cataclysmic effect on New York's economy, and it's time to take action. Stay informed, stay engaged, and demand change. The future of New York's economy is in your hands.