Since President Donald Trump started off his presidency with an infamous wave of executive orders signed on Day One, one major campaign promise was missing, and that is imposing universal tariffs on all imports. Instead, Trump told reports he plans to narrow his focus on Canada and Mexico.
He pledged to impose a tariff of no less than 25% on both neighboring countries as soon as February 1, 2025. The threat of such measures would be levied in retaliation for allowing illicit drugs and migrants to cross the borders.
Trump also ponders over slamming China with a 10% tariff on all imported goods, accusing the country of allowing fentanyl into the United States. That’s definitely less than the 60% tariff he mentioned in his campaign trail and the 100% tariff he threatened over TikTok’s ownership earlier this month.
Within his very first week in office, Trump also declared he planned to impose “taxes, tariffs, and sanctions” on Russia, especially if it didn’t end the Ukraine war very soon. It’s still unclear how soon those tariffs and threats will come to pass, and if they will, at all.
However, what’s truly imminent is how the president’s sweeping, soon-to-be-imposed tariffs might impact our wallets, as consumers in the United States. Economists have warned us that such tariffs on China, Mexico, and Canada could greatly impact the cost of everyday essentials like food, gas, and clothing. Well, here’s where you might see prices rise sooner than you thought.
Food prices can easily spike across the board
Prices in our grocery aisles will soon leave us with a bad taste. The cost of food is 25% higher than pre-COVID levels, as the Food Industry Association declared, and it truly doesn’t seem to be easing anytime this year.
Mexico and Canada are two of the United State’s top trading partners, as Wells Fargo declared. Besides the European Union, comprised of no less than 27 sovereign nations, Mexico is also the largest source of all United States imports.
To begin with, Mexico is by far the largest supplier of fresh fruit and vegetables in the United States. It is also responsible for 92% of all agricultural imports to the country, according to the latest government data. It is a major supplier of distilled spirits, as the International Food Policy Research Institute declared. A 25% tariff on Mexico might cause the cost of fresh vegetables, fresh fruit, berries, baked cereals, and avocados to drastically increase.
Outgoing Canadian Prime Minister Justin Trudeau also declared that U.S. consumers will end up paying more if Trump imposes tariffs on Canadian goods. For Trudeau, there’s no deal “on the table” since the country is seriously considering putting retaliatory measures on beverages such as Florida orange juice and other goods. That, if President Trump decides to impose 25% tariffs on all Canadian imports. The list can go on.
In fact, according to the United States Department of Agriculture, Canada is one of the biggest suppliers of essentials on your grocery list. Some of the most important ones on the list are baked goods, cereals, pasta, vegetable oils, beef products, live animals, chocolate, and other grain products.
The prices of vehicles can also increase
Buying a car or auto parts could soon become more expensive if President Trump imposes the 25% tariffs on Canada and Mexico. The steep tariffs could interrupt supply chains from the auto industry, which might cause a spike in prices, as Wells Fargo analysts predicted. Canada and Mexico are seen as the main exporters of automotive parts and vehicles to the United States.
Prices for U.S.-made automobiles could also rise by a minimum of $2,100 if the tariffs are imposed. Moreover, vehicles that are manufactured completely in Canada and Mexico could cost as much as $8,000 to %10,000 more.
The hardest hit are the companies that are the U.S.’s biggest carmakers: General Motors (GM), Ford, and Stellantis. They all have manufacturing plants in Mexico and Canada and could easily stand to lose between $5 and $9 billion.
Some GM vehicles manufactured in Mexico also include the Chevrolet Blazer, Chevy Equinox, and Cadillac Optiq. They are all made in the Ramos Arizpe plant. There, you can also find the Chevy Equinox EV.
Gas prices to rise
Prices at the gas pump can also increase more than expected if these measures are imposed. Canada is our main source of crude oil imports and industrial supplies such as steel for the United States. Over 71% of U.S. crude oil imports are assured by Canada and Mexico.
Out of that share, 60% of oil comes from Canada. The shocking 25% tariffs would greatly impact consumer prices for gasoline, diesel fuel, and other petroleum products all over the country. Some states might be more affected than others by these tariffs, mainly in the Midwest.
That’s definitely bad news since gas prices are already on the rise because of seasonal patterns.
They are also expected to reach $3.50 per gallon by spring. The premier of Ontario Doug Ford has been transparent concerning the implications of Trump’s tariffs, noting that Canada won’t remain complacent. “We will cut off energy from Michigan, over to New York State, and over to Wisconsin,” he said in the latest report by the Associated Press. “I don’t want this to happen.”
Proposed tariffs might lead to crazy inflation
If you expect inflation to go down, you should know right off the bat that these measures won’t bring us any closer to that. A new Wells Fargo report discovered that imposing 25% tariffs on all imports from Mexico and Canada on February 1 would lead to increased retaliation and result in slower domestic growth for the United States and higher consumer prices.
Model simulations show that the annual rate of consumer price inflation might reach half a percentage point higher by the end of the year if Trump’s tariffs are set in place. For the sake of comparison, GDP growth might fall by a full percentage point relative to what we estimated as a baseline for this year.
Are Trump’s tariffs just a bluff?
Tariffs are set to be an overarching theme, especially during the Trump administration’s second term. Economists warn it might provoke collateral damage to our finances. As reported by Kiplinger, prices of everyday goods might spike, especially if steep tariffs are enacted.
The United States imported almost $500 billion worth of merchandise from Mexico and $410 billion from Canada. As Canada and Mexico account for under 30% of all United States goods imports, their categories are very important for the U.S.
Auto parts and manufactured vehicles, crude oil, as well as fresh foods and vegetables are some of the most notable areas that might become quite hard to hit by these potential 25% tariffs. Economists also say that Trump’s tariff proposal might ignite a trade war, which could cause our prices to increase while also impacting Canada and Mexico’s economies.
As it has been reported, tariffs levied on foreign nations are paid by U.S. importers. This basically means a 25% tariff on Canadian goods could be paid by the U.S.-based importer, and that cost is mainly passed to consumers like us. After all, businesses still need to make a profit.
CNN reports that economists call Trump’s plans a bluff. The U.S.-Mexico-Canada Agreement is still set to be reviewed the following year, as these discussions could potentially speed up the timeline, as they stated.
At the moment, all eyes seem to be on the Trump administration 24/7, since the 25% tariffs on Mexico and Canada are set for February 1, 2025. We advise you to stay informed since such looming changes can greatly impact your wallet.
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Trump is so stupid, he will destroy us all.