The US President-elect Donald Trump is set to take over office on January 20. And among his first acts is threatened measures to slap a 25% tariff on imports from America’s biggest trading partners – Mexico and Canada. Of course, this is to be in the name of rebalancing trade relationships but which will undoubtedly be felt at the pocketbooks of American consumers. We examine just how these tariffs will rise in prices for several items, changing life in America.
Effect of Trump’s Tariffs on American Consumers
This is, in fact a big change in America’s trade policy as undertaken by President Trump to impose tariffs on goods from Mexico and Canada. This action follows a heated trade war with China, which was meant to boost US manufacturing, national interests, and solve what he found to be an unbalanced trade relationship.
President Joe Biden has largely continued the tariffs established by the Trump administration but has also introduced some new ones. However, these new tariffs are coming at a time when the U.S. is extremely dependent on imports from Mexico and Canada, and most American businesses may have little choice but to pass along the increased costs to consumers.
As a result, day-to-day items bought by Americans will become dearer. Here’s a closer look at all the day-to-day items set to become pricier with Trump’s tariff plan in place.
Gas Prices Could Skyrocket
An across-the-board tariff will obviously mean substantially higher gasoline prices-one of its most immediate effects. That reason is that the United States imports an enormous quantity of crude oil from Canada. It becomes gasoline and heating oil-a kind of tariff would have their own pass-through, pumped-up impact at the pumps between 25 to 75 cents per gallon-actually strongest in the Great Lakes, the Midwest and in Rockies-where concentration is mainly placed.
Canada’s Trans Mountain pipeline expansion has boosted oil exports to the U.S. to 4.3 million barrels per day. “You can’t just overnight process different oil. It would take investments and years. More U.S. supply wouldn’t help,” Patrick De Haan, Head of Petroleum Analysis at GasBuddy, said.
Tariff On Agriculture
The agricultural sector also relies heavily on imports in the US, especially from Mexico. The recent climate change has made farming in America less favorable, and has relied on its southern neighbor to source a variety of the country’s agricultural needs. In 2022 alone, the United States imported around $44.1 billion’s worth of agricultural products from its southern neighbor, Mexico which included important products such as avocados. A 25 percent tariff could send the prices of guacamole and avocado toast skyrocketing for U.S. consumers.
Higher Automobile Prices
Mexico plays an important role in the automotive industry in the United States as several U.S. automobile companies rely on parts supplied by Mexico. A 25% tariff would snap a supply chain and increase it even more to manufacture vehicles. In 2022, the United States imported $44.76 billion worth of vehicles from Mexico. Increased automobile prices would be passed down to consumers who are already feeling increased prices in the auto market.
Blow To Beer And Spirits
Those beers of which 80% actually originate from Mexico, along with other tequilas and spirits, would not be safe from such tariffs. Indeed, according to data compiled by the U.S. Department of Agriculture, U.S. imports of $4.6 billion were bought in 2023 regarding Mexico-bought tequila, followed by $108 million imports of mezcal.
A 25% tariff on these products could lead to price hikes for consumers, with the added consequence of potential job losses in the hospitality industry, which is still recovering from the pandemic.
Job Loss And Higher Consumer Expenditure
While the aim of Trump’s tariffs is to protect U.S. manufacturing and national interest, they could be counterproductive in the following ways. Economists and business leaders remain on guard, cautioning that these tariffs will only inflate prices to American consumers, lead to losses of jobs among those who use imported products, and even affect the economy through a slow growth rate. As costs mount, so will these go forward to cost consumers whose living expenses will climb.
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