U.S. Imports from Canada and Mexico: A Tariff Threat Analysis

The U.S. imports a significant amount of goods from Canada and Mexico, with the two countries accounting for 28% of all U.S. imports in 2024. As President Trump mulls imposing 25% duties on imports from these neighboring countries, it is crucial to analyze the potential impact on the U.S. economy and consumers. This article will delve into the top imports from Canada and Mexico, the potential consequences of tariffs, and the industries most likely to be affected.

The top imports from Canada and Mexico in 2024 include:

1. Automobile and light-duty motor vehicle manufacturing: $102.21 billion (45% of total imports from Canada and Mexico)
2. Crude oil: $101.45 billion (66% of total imports from Canada and Mexico)
3. Electronic computers: $38.99 billion (37% of total imports from Canada and Mexico)
4. Other motor vehicle parts: $28.28 billion (60% of total imports from Canada and Mexico)
5. Goods returned (exports for Canada only): $23.28 billion (26% of total imports from Canada and Mexico)

If President Trump imposes a 25% tariff on these imports, the U.S. auto industry could face significant challenges. The U.S. imported $87 billion worth of motor vehicles and $64 billion worth of vehicle parts from Mexico last year, while motor vehicles were the second-largest good the U.S. imported from Canada last year, totaling $34 billion. A 25% tariff would likely increase the cost of cars and car parts, straining Americans' wallets and potentially leading to reduced consumption.

The energy sector would also be heavily impacted by a 25% tariff on Canadian oil imports. The U.S. imported $97 billion worth of oil and gas from Canada last year, making up 24% of total U.S. oil imports. This could lead to increased gas prices, with Patrick De Haan, head of petroleum analysis at GasBuddy, estimating a hike of between 25 cents and 75 cents per gallon. This would most directly impact Americans located around the Great Lakes, Midwest, and Rockies, as these regions heavily rely on Canadian oil imports.

The food and beverage industry could also face significant consequences from a 25% tariff on Mexican goods. Last year, the U.S. imported $46 billion of agricultural products from Mexico, including $8.3 billion worth of fresh vegetables, $5.9 billion of beer, and $5 billion of distilled spirits. These products now stand to cost consumers more, especially since grocers and farmers tend to operate on very low profit margins, giving them little leeway to absorb higher tariff costs.

In conclusion, a 25% tariff on imports from Canada and Mexico could have significant consequences for the U.S. economy and consumers. The auto, energy, and food and beverage industries would be particularly affected, leading to higher prices for consumers and potential supply chain disruptions. As President Trump considers this move, it is essential to weigh the potential benefits and drawbacks, ensuring that any decision is made with a clear understanding of the potential impacts on the U.S. economy and consumers.