Trump’s tariffs on Mexican and Canada: The consequences for American consumers in the early stage of a trade war with the other side of the world

Electronics, avocados, vegetables, cars, tractors, crude oil — these are some of the things that could soon get more expensive for US consumers. Goods from Mexico and Canada will be subject to a 25 percent tariffs on February 1st under a plan by President Donald Trump. White House press secretary Karoline Leavitt has also said Trump was “very much still considering” tariffs on China on the same day. As of late Thursday, the specifics of these plans were still up in the air.

Trump threatened tariffs on imports from Colombia last weekend, but changed course after that country reached an agreement with the U.S. on terms for accepting deportees. The stakes of a trade war with Mexico and Canada are much higher. The U.S. trade with its neighbors is more than twice that with the other side of the world.

Businesses and shoppers in the U.S. had already started making contingency plans. According to trade data released this week, there was an increase in imports in December.

“Importers were trying to bring in goods ahead of time,” says Matthew Martdin of Oxford Economics. Being in possession of inventory is not without it’s costs or risks. But businesses clearly believe there will be enough demand that they won’t be sitting on this inventory for long.”

Some individual shoppers tried to avoid the tariffs. Personal spending on durable goods such as autos and televisions jumped in December, according to figures released Friday by the Commerce Department. Mexico is the largest producer of flat-screen TVs.

General Motors told financial analysts on Tuesday that it could shift some pickup truck production out of Mexico and Canada if tariffs are imposed. But the automaker is reluctant to act while the trade landscape is still uncertain.

The Trump Trade War: Why Will It Happen? When Will It End? What Will It Mean to Tech Industry and How Can China Shut It Down?

Martin said higher costs at the pump for Americans and higher input costs for businesses around the nation are a result of increased expenses by 25%.

“We don’t think equity markets would really like 25% tariffs on Canada and Mexico,” Martin said. “It would really hurt the economy and hopefully that dissuades him from going full bore. This may be more of a negotiating tactic.

Trump has said the tariffs on Canada and Mexico are punishment for immigration as well as fentanyl coming into the US from the two countries. He used them as bargaining chips earlier this month, when he threatened to impose tariffs on imported coffee if the country did not agree to military deportation flights. As potentially disruptive as tariffs could be, there are a lot of “ifs” here. The Trump administration is already behind on its own schedule. It reportedly still doesn’t know exactly which tariffs it will be imposing. And its last sweeping policy change — a chaotic freezing of federal funds — was promptly blocked by a court and then walked back amid confusion and public anger. So it’s anyone’s guess how long an all-out trade war could last — if it happens at all.

Some industries and companies are trying to shift some of their supply chain from China to India in order to deal with the tensions between the US and China. The trade groups say import tariffs will cause prices for consumers to go up and spending to go down. A consumer technology association estimated that the price of a laptop could increase by more than 70 percent under the original 60 percent tariffs on China. Some estimates suggest that higher prices for tech products — many of which are produced in China — could cause consumer spending to drop by billions of dollars.

The International Emergency Economic Powers Act (IEEPA) and the Product Safety of the United States, Mexico, and Canada: A Trump Post on Truth Social

“This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl,” Trump said in a post on Truth Social. It is my duty as president to make sure that the safety of everybody is ensured.

Canadian crude oil will be subject to a lower, 10% tariff, which could mitigate the effect on U.S. gasoline prices. Midwestern oil refineries are heavily dependent on Canadian crude.

The group said that the products are distinctive to each country and the tariffs would hurt the domestic industries. Bourbon and Tennessee Whiskey can only be made in the U.S., Tequila in Mexico, and Canadian Whisky in Canada.