Trump's Tariffs: What's Getting More Expensive and Why

As President Donald Trump follows through on his promise to impose steep tariffs on Canada, Mexico, and China, consumers across the United States are bracing for higher prices on a wide range of goods. The 25% duty on most Canadian and Mexican imports, along with a 10% tariff on Chinese goods, is expected to have a significant impact on the cost of various products, from food and energy to electronics and automobiles. Let's take a closer look at what's likely to get more expensive and why.



Fruits and Vegetables

Mexico is the largest supplier of fruit and vegetables to the US, accounting for between half and 60% of US imports, while Canada also supplies a significant amount. With a 25% tariff on these imports, grocery retailers, which operate on thin profit margins, may have to pass on the increased costs to consumers, leading to higher prices for fruits and vegetables. For example, the price of avocados, which have already seen price fluctuations due to supply chain disruptions and increased demand, could rise further, making them less affordable for consumers.



Automobiles

The US car industry is a complex mix of foreign and domestic manufacturers, with supply chains that often involve parts and vehicles crossing borders multiple times before reaching the showroom. With a 25% tariff on Mexican and Canadian goods, car parts and half-finished vehicles would be taxed every time they move countries, leading to an even bigger increase in prices. General Motors has already stated that it will try to rush through Mexican and Canadian exports and explore relocating manufacturing to the US to mitigate the impact of the tariffs. However, these changes will likely result in higher production costs, which will be passed on to consumers in the form of more expensive vehicles.



Consumer Electronics

The 10% tariff on Chinese goods, including consumer electronics, is expected to have a significant impact on the cost of these products in the United States. According to the US Department of Commerce, China is the largest supplier of consumer electronics to the US, accounting for around 70% of the total imports in this category. This means that a substantial portion of the electronics Americans use, such as smartphones, computers, and televisions, are made in China. The increased cost of these goods will likely be passed on to consumers, leading to higher prices for electronics and other products.

Energy Products

The 10% tariff on Canadian energy products, including oil and natural gas, is expected to have an impact on US gasoline prices. According to Tom Kloza, global head of energy analysis for OPIS, the tariff will limit the impact on gasoline prices, but it will still be felt, especially if the tariffs stay in place through the summer. The impact is not expected to be felt equally nationwide, with the Midwest region likely to be most affected. Most Canadian oil is shipped to Midwest refineries via pipeline, and the states most likely to be affected include Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, Pennsylvania, South Dakota, and Wisconsin. Interestingly, 12 of these 16 states begin February with an average retail gasoline price under $3 a gallon, which may not last due to the tariffs.



In conclusion, President Trump's tariffs on Canada, Mexico, and China are expected to have a significant impact on the cost of various goods in the United States. Consumers should brace for higher prices on fruits and vegetables, automobiles, consumer electronics, and energy products. While the extent of these price increases remains to be seen, it is clear that the tariffs will have a ripple effect on the US economy, potentially leading to a decrease in consumer spending and economic growth. As the situation unfolds, it will be important for consumers to stay informed and make adjustments to their spending habits as needed.