President-elect Donald Trump has vowed to impose a 25% tariff on all goods imported from Mexico and Canada – America’s biggest trading partners – starting January 20, his first day in office.
But the imposition of this tariff is also sure to have a serious impact on their own countrymen, who may have to face higher prices on various goods.
His first term was marked by a significant trade war with China, aimed at boosting American manufacturing, securing national security interests, and addressing Trump’s extremely unbalanced trade relationship.
President Joe Biden left most of these tariffs in place and even added new ones.
But the new tariffs come at a time when the US has become more dependent on imports from Mexico and Canada. Mexico has overtaken China to become the top country exporting goods to the US, while Canada is in third place. This means that the new tariffs will virtually be unavoidable for Americans, as businesses facing higher costs will likely pass them on to consumers.
This potential trade war could break the banks. Here are some items that could become more expensive if Trump decides to follow through with his tariff plan.
gas
The US imports large quantities of crude oil from Canada, which is refined to produce gasoline and heating oil. A 25% tariff could lead to an increase of 25-75 cents per gallon, affecting Americans in the Great Lakes, Midwest and Rockies regions.
After Canada expanded the Trans Mountain Pipeline, oil imports to the US reached 4.3 million barrels per day.
“You can’t process different oil overnight. It will take investment/years. More US supply won’t help,” Patrick de Haan, head of petroleum analysis at GasBuddy, said on X.
produce
As a byproduct of climate change, the US has become less suited to agriculture and is more dependent on Mexico.
The US is expected to import $44.1 billion worth of agricultural products from Mexico in 2022.
90% of avocados consumed by Americans in 2022 were imported. The 25% tariff could make guacamole and avocado toast more expensive.
cars
Mexico is a major center of car manufacturing, with many American car manufacturers relying on parts from Mexico to build their vehicles. A 25% tariff could disrupt this supply chain and drive up car prices.
Last year, vehicles worth $44.76 billion were imported from Mexico to the US.
Liquor
According to US Department of Agriculture data, 80% of beer imports come from Mexico. In addition, there is tequila coming from Mexico and other spirits coming from Canada, which add to the import growth.
In 2023, $4.6 billion worth of tequila and $108 million worth of mezcal were imported by the US from Mexico, according to the Distilled Spirits Council.
Spirit’s tariffs are likely to set off a chain reaction that could also lead to job losses in the hospitality industry, which is still on the road to recovery after the pandemic.
Tariffs on these imports are sure to hurt consumers if businesses face higher costs. Trump’s tariff plan has already caused concern among businesses and economists, who warn it could lead to higher prices, job losses and a decline in economic growth.
