President Donald Trump’s sweeping tariffs on around $1.6 trillion worth of imports from Mexico, Canada and China—America’s three largest trading partners—could have far-reaching consequences, including potential high prices of avocados, gasoline and automobiles.
Over the weekend, Trump’s 25% tariff on Canadian goods and 10% tax on oil, natural gas and electricity triggered $105 billion in Canadian retaliatory tariffs on US products.
Mexico and China are also responding, escalating tensions and worrying US consumers about potential price hikes. Beijing plans to file a lawsuit with the World Trade Organization.
Trump maintains that his tariffs will usher in a “golden age” like the late 1800s, even suggesting Canada should become the 51st state to avoid the high import taxes.
Critics warn that the high import tariffs could backfire, driving allies toward alternative trade partners.
The tariffs raise costs for US businesses importing goods, and economists predict these costs will be passed on to consumers. Yale’s Budget Lab estimates that US households could lose $1,245 annually if the tariffs continue.
Key industries affected
Canada accounts for 60% of US oil imports, while Mexico is the largest supplier of fruits, vegetables, beer and electronics.
Both countries were responsible for nearly 50% of US auto imports in 2023. As a result, car prices could rise by $3,000 due to supply chain disruptions.
While the White House downplayed concerns, economists warn the tariffs could fuel inflation, delay Fed rate cuts, and trigger market volatility. This could evolve into a political and economic crisis, especially as the US economy and cost of living remain top voter concerns in the 2024 election.
Former Treasury Secretary Larry Summers calls the tariffs a “self-inflicted wound,” warning they could push American allies toward China.