Trump tariffs will cause price hikes on these everyday goods
President Trump confirmed Monday that his long-promised tariffs on goods from Mexico and Canada will go into effect on Tuesday.
Why it matters: The announcement sent financial markets tumbling in anticipation of a potential trade war between the U.S. and its top trading partners.
State of play: Canada and Mexico will see 25% tariffs on goods exported into the U.S., while a 10% tariff will be levied on Chinese exports.
- The latter comes on top of the 10% tariff Trump already imposed on Chinese exports earlier this year.
- Trump's decision to pull the trigger on tariffs on Canada and Mexico came after he agreed early last month to delay the planned tariffs for a month.
The big picture: The tariffs will see Trump make good on his campaign pledge to institute sweeping tariffs on America's trade partners.
- Tariffs function like an additional tax on goods and are often passed onto consumers. Some retailers have already warned that they could be forced to raise prices.
- Exactly how much of the tariffs' costs are passed onto consumers remains to be seen, but experts predict that by next year the tariffs will reduce Americans' after-tax income by 1%.
- The tariffs are expected to hit working-class Americans especially hard.
Here are the goods that will be hit hard by Trump's tariffs:
Cars
Trump's tariffs threaten to decimate the U.S. auto industry, which relies on Canada and Mexico to assemble vehicles.
- Due to the complicated auto industry supply chains criss-crossing North America, a single car component could cross the U.S. border six to eight times before final assembly — with a 25% tariff applicable each time.
- This could make U.S.-made vehicles so expensive that buying a finished car from Europe, Japan, or Korea, could be significantly cheaper — even if tariffs are levied on those vehicles.
Energy
The U.S. relies on Mexico and Canada for critical energy exports that could make everyday activities — like cooking and heating their homes — more expensive for everyday Americans.
- Oil and gas are some of the U.S.' top imports from Mexico, while top imports from Canada are crude oil, petroleum gas and coal.
- In fact, the U.S.' reliance on Canada for crude oil has been increasing for decades.
Electronics
Computers and other electronics are expected to see persistent price increases due to the tariffs.
- The U.S. imports a significant portion of its electronics from China, including smartphones and computers.
Household goods
The U.S. is the largest market for Chinese exports, buying about 15% of everything China sends out.
- This encompasses a wide array of everyday household goods, from machinery, toys, furniture, sporting goods, footwear, clothing and textiles.
Food and beverages
The U.S. imports large amounts of food and beverage products from Canada and Mexico.
- In 2023, 63% of U.S. vegetable imports came from Mexico. The nation also supplied 43% of the United States' fruit and nut imports, per the U.S. Department of Agriculture (USDA).
- About 81% of U.S. beer imports came from Mexico in 2023.
- Canada is another major source of food for the U.S. and in 2023, almost 64% of U.S. agricultural imports from Canada consisted of "meat and other animal products, grains and feeds, and oilseeds and oilseed products," per the USDA.
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