During President-elect Donald Trump’s first term, the US engaged in a trade war with China to address trade imbalances and boost domestic manufacturing. President Joe Biden has maintained most of these tariffs and even introduced new ones. As tensions persist between the US and China, American consumers are bearing the brunt of increased prices on Chinese imports.
Now, Trump is turning his focus towards Mexico and Canada, the US's largest and third-largest trading partners. He has pledged to impose a 25% across-the-board tariff on all goods imported from these countries starting January 20, potentially leading to higher costs for consumers.
Impact on Consumer Goods
Gas: The US imports significant amounts of crude oil from Canada, which is refined into gasoline. A 25% tariff could result in a price increase of 25 to 75 cents per gallon, affecting regions like the Great Lakes, Midwest, and Rockies.
Produce: With climate change affecting US growing conditions, the country relies heavily on Mexican produce. A tariff on Mexican agricultural products could lead to higher prices for items like avocados, of which 89% of imports come from Mexico.
Cars: Mexico is a major source of vehicle imports for the US, with many car manufacturers relocating production there to avoid tariffs. A 25% tariff on Mexican cars and parts could significantly impact the auto industry.
Challenges and Consequences
The proposed tariffs come at a time when the US is increasingly dependent on imports from Mexico and Canada. Mexico recently surpassed China as the top exporter to the US, highlighting the significance of these trade relationships.
Businesses are likely to pass on the increased costs to consumers, making it difficult for Americans to avoid the impact of these tariffs. While Trump aims to prioritize domestic production, the immediate effects could result in higher prices and economic challenges for consumers.
