Americans could soon pay more for everything, from cars to avocados if the Trump administration proceeds with their slap plan New rigid rates in the three largest commercial partners in the country as of February 1.
President Trump will impose 25% tariffs on imports from Mexico and Canada from this weekend, as well as an additional 10% rate to China imports, said White House spokeswoman, Karoline Leavitt on Friday.
While Trump describes tariffs as import tariffs paid by foreign countries, in fact they are paid directly to the federal government by US companies, according For the Fiscal Foundation, a group of taxes centered. Instead of swallowing costs, corporations generally increase their prices for those imported goods to recover all or some of the expenses.
Who pays the cost?
“If there is a significant increase in tariffs … these costs are probable to be transferred to US consumers and businesses,” said Brian Peck, executive director of the Center for Transnational Law and Business of the University of Southern California, to CBS Los Angeles.
“From Canada, we import oil, wood, wood and cement,” he added. “More than 20% of the agricultural products that we bring to the United States come from Mexico.”
A stranger is whether the Trump administration will forge some exceptions, such as oil and gas products. Canada provides about 20% of the oil used in the US. Enter in force, Patrick de Haan, oil head analysis in Gasbuddy, He said.
As painful as the highest costs could be for American consumers, the greatest impacts would probably be sentence for Canadian and Mexican economies, according to Wendong Zhang, an assistant professor of applied and political economy at the University of Cornell. A 25% tariff could cause Canada and Mexico to lose 3.6% and 2% of real GDP, respectively, compared to a 0.3% decrease for the USA., Zhang estimated.
This is what could be more expensive for American buyers if Trump administration tariffs enter into force.
Avocados, beef and other foods
Inflation consumers can face an increase in the prices of fruits, vegetables and nuts imported from Mexico, including avocados, just in time for the Super Bowl on February 9.
The United States imported more than $ 45 billion in agricultural products in Mexico in 2023, including fresh strawberries, raspberries, tomatoes and beef, according to the United States Department of Agriculture. The United States also imports Mexican beer, tequila and other drinks and spirits.
Meanwhile, the United States imported around $ 40 billion of Canadian agricultural products that same year, including beef, pork, grains, potatoes and canola oil, the USDA points out.
A 25% tariff could raise prices for all these products.
“Ledible stores operate on really small margins,” said Scott Lincicome, vice president of the General Economy of the Cato Institute. “They can’t eat rates … especially when you talk about things like avocados that basically all of them, 90%, come from Mexico. You’re talking about guacamole rates just before Super Bowl.”
Cars
American consumers buy more and more cars that are built in Canada or Mexico or who use imported parts of those nations. The United States imported $ 69 billion of cars and light trucks in Mexico in 2023, and another $ 37 billion of Canada, according to S&P Global Mobility.
In addition to that, around $ 78 billion in cars emerged from Mexico and $ 20 billion of Canada. For example, the engines used in the Ford F series trucks come from Canada.
Because American importers are expected to reduce additional tariff costs in vehicle label prices, the average price of the car in the United States could increase by approximately $ 3,000, TD Economics estimates. That would come at a time when the new average car is already sold for $ 50,000 and the average car used for $ 26,000, according to Kelley Blue Book.
Wood
Around a third of the soft wood used in the US. UU. It is imported from Canada every year, according A Rajan Parajuli, associate professor of Economics and Forest Policy at the State University of North Carolina.
A 25% tariff on Canadian wood can be added could cause a “supply shock”, the forest resources association, a commercial group, a commercial group, wrote In a December blog post. “Regarding wood, the United States still needs Canadian supplies to meet its demand for national consumption,” the group said.
Even so, the slow real estate market of the United States, damping by mortgage rates that remain about 7%, could make it difficult for companies to transmit new rates through higher wood prices, some economists said.
“Wood prices are expected to increase, although a slower housing recovery in the United States, loaded by higher prices, will limit the extent to which exporters may transmit price increases,” said Oxford Economics in a note of research of January 31.
contributed to this report.
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