The newly-implemented tariffs on Mexico, Canada and China could lead to higher prices on many goods imported into the U.S.
President Donald Trump’s tariffs on the U.S.’s top trading partners came into force starting Tuesday, with Canada and Mexico each getting hit with a 25% levy on their imports. Goods from China, meanwhile, now have another 10% tariff on them, building upon a tariff of the same size that the Trump administration already imposed in early February.
The levies on imports from Canada and Mexico had been under a month-long pause but, with Tuesday’s implementation, that has now ended.
“Billions of dollars in new taxes on almost 1.5 trillion in annual trade – along with sky-high uncertainty – will surely reverberate throughout the economy,” Cato Institute Vice President of General Economics Scott Lincicome told FOX Business. “Whether it’s energy, cars, consumer goods, food, or industrial inputs like steel, there will be pain for Americans. The only question is who ends up bearing most of it, companies or consumers.”
TRUMP’S TARIFFS ON CHINA, CANADA AND MEXICO TAKE EFFECT
Matt Preist, CEO of Footwear Distributors and Retailers of America (FDRA), said in a statement that the tariffs “act as taxes, driving up the costs of everyday goods like shoes, significantly burdening American families and businesses.”
China was responsible for 1.2 billion pairs of shoes imported to the U.S. in 2023, according to the FDRA. Meanwhile, some 23 million pairs came from Mexico that year.
The Retail Industry Leaders Association, whose members range from Dollar General and Gap to Costco and more, also warned Tuesday of tariffs driving up prices on household goods for Americans.
“The American people are counting on President Trump to bring down costs and grow the U.S. economy. Tariffs on Canada and Mexico put those goals in serious jeopardy and risk destabilizing the North American economy,” the RILA’s Michael Hanson said in a statement. “Stacking tariffs on household goods will also raise costs on American families, millions of whom have struggled through the worst bout of inflation in forty years.”
Various popular tech products could also become more expensive due to the tariffs, particularly the levies on China.
Roughly 79% of laptops and tablets imported to the U.S. come from China, while the country provides about half of America’s imported speakers and headphones, according to a January report from the Consumer Technology Association (CTA). When it comes to smartphones, Chinese imports represent 78% for the U.S., the CTA found.
RSK Design founder Ravi Sawhney previously told FOX Business consumers are “unlikely to see a noticeable price increase” on smartphones from the tariffs in the “immediate term.”
GET YOUR NEW SMARTPHONE NOW BEFORE TARIFFS IMPACT PRICES
“Most major smartphone manufacturers plan inventory and pricing strategies months in advance, so existing stock already in the market won’t be affected,” he explained. “Additionally, companies often absorb short-term cost increases rather than immediately passing them on to consumers to remain competitive.”
However, Sawhney said smartphone buyers “could see gradual price increases over the next several months” if the U.S. continues to keep the tariffs, noting manufacturers “will either absorb higher production costs, shift supply chains, or pass costs directly to consumers.”
Best Buy said Tuesday that it was “highly likely” American consumers will see price increases on consumer electronics.
“The consumer electronics supply chain is highly global, technical, and complex. China and Mexico remain the number one and number two sources for products we sell, respectively,” CEO Corie Barry said. “While Best Buy only directly imports 2% to 3% of our overall assortment, we expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely.”
Food is another area when Americans could see tariff-driven price increases.
Canada supplies tens of billions of dollars worth of imported agricultural products in total to the U.S. each year. Among them are grains, meats, vegetables and dairy products.
Mexico is also an important trading partner when it comes to food, shipping fruits, vegetables, alcohol and other products to the U.S. each year.
When Trump originally unveiled the Canada and Mexico import tariffs in early February, the National Association of Home Builders (NAHB) said they could “increase the cost of construction and discourage new development,” with consumers at risk of “paying for the tariffs in the form of higher home prices.”
The U.S. imports over 70% of its softwood lumber and gypsum from Canada and Mexico, according to the NAHB.
In addition, Americans could see car prices pushed as much as $12,000 higher depending on the type of vehicle because of the Mexico and Canada tariffs, an analysis from the Anderson Economic Group found.
CAR PRICES COULD RISE $12,000 DUE TO TRUMP’S LATEST TARIFFS
The tariffs could potentially hit some auto parts multiple times as they cross the borders through the highly interconnected automotive supply chain between America, Canada and Mexico, the Cato Institute reported.
The tariffs could impact the energy sector. Trump’s action against Canada includes a lower levy on energy from the U.S.’s northern neighbor amounting to 10%.
For instance, Massachusetts Gov. Maura Healy slammed the impact they could have on costs in her state and the broader New England region.
The 10% tariff on petroleum and natural gas imports from Canada could result in costs of $370 million per year for Massachusetts, according to a press release from her office. Across New England, it could be over $1 billion, she said.
A report from the Budget Lab at Yale found Trump’s tariffs on China, Canada and Mexico could weigh on consumers an average of $1,600 to $2,000 per household prior to them making switches in their purchases. The cost would average $1,100 to $1,400 after that happens, it projected.
Jay Caruso, Eric Revell and Daniella Genovese contributed to this report.
