President-elect Donald Trump plans to impose tariffs on imports from Mexico, Canada, and China, potentially impacting the cost of various goods, according to experts.
Trump announced on Truth Social his intention to sign an executive order on January 20, 2025, implementing a 25% tariff on goods from Mexico and Canada, and a 10% tariff on Chinese imports. He cited concerns about border crossings and drug trafficking as justification. His campaign promises included tariffs ranging from 10-20%, potentially reaching 60% on Chinese goods. Economists fear this will increase prices and fuel inflation.
Kimberly Clausing, a former Biden administration economist, notes the potential economic ramifications, stating that this action, during a time of high inflation, will significantly impact consumers and hinder job growth due to the integrated nature of North American manufacturing.
Alan Deardorff, a University of Michigan economics professor, suggests the higher import costs may lead to increased domestic prices and potentially shift production away from affected countries.
With limited details released, economists express uncertainty about potential tariff exemptions. Below are some of the top imports potentially affected.
Mexico
Mexico, the U.S.’s top trading partner, exports cars, car parts, and electrical appliances. These goods, and U.S.-assembled products using Mexican parts, could see price increases due to the proposed tariffs.
Clausing highlights the direct and indirect cost increases for consumers, affecting various products, from toasters to larger appliances. Mexico also supplies food products to the U.S., potentially impacting their costs as well.
Canada
Canada, the second-largest trading partner, primarily exports crude oil, petroleum gas, lumber, and automotive products to the U.S. Tariffs could raise lumber and fuel prices, impacting construction costs and home heating.
China
China, the third-largest trading partner, exports electronics including phones, televisions, and computers to the U.S. The proposed tariffs could raise the prices of these goods. Previous exceptions for some Chinese-assembled products, such as certain Apple products, existed during the prior Trump administration, but future exemptions are uncertain.
Economists worry about potential retaliatory measures from impacted countries.
Mexican President Claudia Sheinbaum hinted at potential retaliatory tariffs. Canadian Prime Minister Justin Trudeau spoke with Trump, describing the conversation as “good.” Several Canadian officials, including Ontario Premier Doug Ford, condemned the plan and threatened retaliation.
Clausing concludes that the economic consequences could be severe for North America, though acknowledging the possibility that the plan might ultimately be a bluff. However, given Trump’s past actions, she finds this unlikely.