President Donald Trump signed an order to impose stiff tariffs on imports from Mexico, Canada and China on Saturday night.
The Republican president posted on social media that the tariffs were necessary ‘to protect Americans,’ pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal immigration into the U.S.
Trump declared an economic emergency in order to place duties of 10 percent on all imports from China and 25 percent on imports from Mexico and Canada.
Energy imported from Canada, including oil, natural gas and electricity, would be taxed at a 10 percent rate.
The tariffs will go into effect on Tuesday, setting up a showdown in North America that could potentially sabotage economic growth.
Cars and auto parts
For decades, auto companies have built supply chains that cross the borders of the United States, Mexico and Canada.
More than one in five of the cars and light trucks sold in the United States were built in Canada or Mexico.
In 2023, the United States imported $69 billion worth of cars and light trucks from Mexico – more than any other country – and $37 billion from Canada.
Another $78 billion in auto parts came from Mexico and $20 billion from Canada. The engines in Ford F-series pickups and the iconic Mustang sports coupe, for instance, come from Canada.
Crude oil and gasoline
Canada is by far America’s biggest foreign supplier of crude oil. From January through November last year, Canada shipped the U.S. $90 billion worth of crude, well ahead of Number 2 Mexico at $11 billion.
For many U.S. refineries, there’s not much choice. Canada produces the type of crude oil that American refineries are geared to process.
Tax on Canadian oil imports would likely result in higher gas prices, particularly in the Midwest.
TD Economics figures that Trump’s tariffs could push up U.S. gasoline prices by 30 cents to 70 cents a gallon.
Alcohol
Tariffs would raise the price for those raising a glass of Mexican tequila or Canadian whisky.
In 2023, the U.S. imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico, according to the Distilled Spirits Council of the United States, a trade group.
The U.S. imported $537 million worth of Canadian spirits, including $202.5 million worth of whisky.
Canada and Mexico were also the second- and third-largest importers of U.S. spirits in 2023, behind the European Union, the council said.
The council said the U.S. is already facing a potentially devastating 50 percent tariff on American whiskey by the European Union, which is set to begin in March.
Imposing tariffs on Mexico and Canada could pile even more retaliatory action on the industry
Avocados, tomatoes and other fruit & veg
For American consumers still exasperated by high grocery prices, a trade war with Canada and Mexico could be painful.
In 2023, the U.S. bought more than $45 billion in agricultural products from Mexico –including 63 percent of imported vegetables and 47 percent of fruits and nuts. Farm imports from Canada came to $40 billion. A 25 percent tariff will push prices up.
Grocery stores operate on really tiny margins and can’t absorb the tariffs, particularly with regards to fruit such as avocados that virtually all come from Mexico.
U.S. farmers are nervous, too, that Canada and Mexico will retaliate by slapping tariffs on American products such as soybeans and corn.
Tonka trucks
More than one million Tonka trucks are sold in the U.S. each year – all of which are made in China.
Smartphones
During President Trump’s first term several tariffs were placed on a host of industrial goods from China, including during the Biden administration.
The tariff’s were in response to what the administration described as China’s unfair trade practices, but most consumer goods, including smartphones, were spared.
But now an across-the-board 10 percent tariff on goods made in China will be placed on smartphone for the first time and may cause price increases.
Sledgehammers
Sledgehammers made in China are already slapped with an import tariff of 25 percent when they arrive in the U.S.
An additional tariff will further raise costs for importers likely trickling down to retailers.
