Commentary by Stephen Macaulay
“To go from a 10% across the board to 15%, for the broad base of countries, not a huge impact.”-- Bank of America CEO Brian Moynihan, CBS News Face the Nation, December 28, 2025
Moynihan is talking, of course, about the tariffs that President Donald Trump applied in a willy-nilly manner before and after April 2, “Liberation Day.” One wonders what it is “liberation” from — economic sanity?
That Moynihan seems rather, as the kids say, “chill” about a 15% tariff isn’t entirely surprising, given that he is the top exec of the second-largest bank in the country.
According to the latest figures from the Yale Budget Lab, “Consumers face an overall average effective tariff rate of 16.8%, the highest since 1935.” While that is only off 1.8% from Moynihan’s broad characterization of things, a percentage here and a percentage there and pretty soon it is real money:
The latest figures from the Federal Reserve Bank of New York have it that in Q3 2025 there was an increase of $197 billion in household debt in Q3 2025, so the total now stands at $18.59 trillion.
One of the functions of operations like Bank of America is to loan households money. No wonder Moynihan is sanguine about how things are going.
To be sure, there were many people (including me) who thought there would be a bigger impact from the tariffs by now. But for a variety of reasons — like companies buying lots of pre-tariff inventory that they’ve been selling off since, or companies absorbing tariff costs so as to maintain market share — things haven’t gotten as bad as anticipated.
For now.
Writing in Project Syndicate on December 29, Jeffrey Frankel, professor of Capital Formation and Growth at Harvard, put it:
“But firms will not let tariffs erode their profit margins indefinitely. Assuming the tariffs remain, the US can look forward to more price increases, and downward pressure on real incomes, in 2026.”
Or put another way: What was expected to have happened will happen.
And the “reciprocal tariffs” that have been put in place by Trump — because seemingly all the countries in the world have been “ripping us off” — haven’t simply had the people in those countries saying “Thank you, sir, may I have another” but many of them have simply decided they’re no longer interested in products imported from America.
Case in point: the Canadians saying “No” and “Non” to beverages like bourbon.
Here’s this from Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, upon the release of the organization’s mid-year report on exports:
“After celebrating a record year for US spirits exports in 2024, this new data is very troubling for US distillers. Persistent trade tensions are having an immediate and adverse effect on US spirits exports. There’s a growing concern that our international consumers are increasingly opting for domestically produced spirits or imports from countries other than the US, signaling a shift away from our great American spirits brands.”
The organization found “particularly steep” declines in exports to markets including the European Union (which accounted for half of all spirits exports in 2024), Japan, the United Kingdom and Canada.
US spirits exports to Canada are down 85%.
In this case causation may be correlation: Jim Beam announced it will not be operating its main distillery in 2026. It will operate other distilleries, and it will use the time to improve its Clermont, Kentucky, facility, but it goes to the point that businesses like Beam have more than enough issues to deal with without having the government adding more.
On December 8 the US Department of Agriculture announced it will be making $12 billion in “one time bridge payments” to farmers “in response to temporary trade market disruptions and increased production costs.”
So let’s see: Other countries decided to source agricultural products from places not in the US because of the tariffs. What makes anyone think this is “temporary” — unless Trump will rescind tariffs on other agricultural products like he did for coffee, bananas, tomatoes and more?
Increase production costs? Well, there were the price increases farmers faced for fertilizers because of the tariffs, until Trump suspended those, too, on November 13.
But if farmers want some new equipment from John Deere — which makes its gear with steel and aluminum, both of which have 50% tariffs — they’re going to have to pay more for that: John Deere announced it anticipates a $600 million hit to its profits in 2025 — and double that hit, to $1.2 billion in 2026.
Going back to the topic of alcoholic beverages, in the announcement of the bridge payments there is a “List of Trade & Market Access Wins to Date.” It includes this: “Wine exports to Mexico are up 30% in 2025, reaching $18 million.” Sounds good, right?
According to the very same US Department of Agriculture, in 2024 the total value of wine bought from the US by Mexico was $25.4 million.
Perhaps they thought the Mexican people would buy a whole lot more wine between December 8 and December 31.
By the way: In 2024 the number one buyer of US wine by a huge margin over number two EU was Canada, at $459.55 million.
According to the Wine Institute, as of mid-October wine exports to Canada from the US were down 91%. That would be down about $418 million. Sure puts that $18 million the USDA is so chuffed about into perspective.
Macaulay is pundit-at-large for The Hustings, where he writes primarily for the right column.