With rising concerns about inflation and global trade tensions, many Americans are worried about how tariffs could affect their wallets. A recent survey found that 67% of U.S. adults are concerned about tariffs, citing fears of financial insecurity, higher living costs and inflation.
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But according to entrepreneur and “Shark Tank” star Kevin O’Leary, the average American has less to worry about than they might think.
How Tariffs Compare To VAT Taxes Abroad
O’Leary believes that the impact of tariffs on everyday consumers will be minimal, especially when compared to how other countries handle consumption taxes.
“I don’t think it’s going to matter that much,” he told GOBankingRates during a conversation about his partnership with HelloPrenup, an online prenuptial agreement platform.
He explained that while countries like France, Italy and Canada impose a Value-Added Tax (VAT) on goods — typically ranging from 13% to 15% — the U.S. does not. These VATs are applied to imported products, including American goods sold abroad.
“So you see, the E.U. deal that just got penned, the headline number was 15%,” O’Leary said. “It’s just a reciprocal tax on European goods being sold here. It’s slightly inflationary, but it’s reciprocal. It’s not like one side is taxing the other more. That’s why the market is taking it in stride.”
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Why the Market Isn’t Panicking
O’Leary emphasized that the financial markets have responded calmly to recent tariff announcements, which he sees as a sign that the broader economic impact will be limited.
“One of the reasons the market is at all time highs, even though there’s a lot of controversy about tariffs, is there’s a lot of optimism about what the the next few years are going to look like,” he said. “Trump could never pass a consumption tax in the U.S., but he just called it a tariff and it did the same thing. The market has taken it for a for reciprocal tax, and it’s good with it.”
This perspective suggests that while tariffs may sound alarming in headlines, their actual effect on consumer prices and economic stability may be more muted than expected.
Why Consumers May Not Feel the Full Impact
Another reason O’Leary isn’t sounding the alarm is that companies often absorb a portion of tariff-related costs before they reach consumers.
“About a third of it gets absorbed by various elements of the supply chain,” he said.
This means that manufacturers, distributors and retailers may adjust their margins or sourcing strategies to offset the added costs, helping to shield consumers from price hikes.
For consumers worried about rising costs, O’Leary believes that, ultimately, the impact of tariffs will be more political than personal.
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This article originally appeared on GOBankingRates.com: Kevin O’Leary: Why Tariffs Won’t Hit Your Wallet as Hard as You Think
