Which goods will be more expensive if Trump imposes 25% tariffs on Mexico and Canada?
During President Donald Trump's first term, the United States launched a comprehensive change in trade policy with China to promote domestic manufacturing, protect national security interests and address a trade relationship that Mr. Trump considered "seriously imbalanced."
President Joe Biden has kept most of the Trump-era tariffs in place and even added some new ones. As the world’s two largest economies continue to clash, American consumers have been left paying higher prices for Chinese imports.
Now, President-elect Trump has turned his attention to America’s two largest and third-largest trading partners: Mexico and Canada. He has promised an unprecedented move: on January 20, 2025, the day he is scheduled to take office, Trump will announce that he will impose a new 25% tariff on all US imports from these two neighboring countries, goods that are currently largely duty-free thanks to the United States-Mexico-Canada Agreement (USMCA), which he negotiated.
Here are some of the top consumer goods that Americans import from Mexico and Canada that could become more expensive if Mr. Trump carries out his tariff plan:
Gasoline
Crude oil, which is used to make gasoline and heating oil, is one of the top U.S. imports from Canada. In July, the U.S. imported a record 4.3 million barrels per day thanks to the expansion of Canada’s Trans Mountain pipeline, according to the U.S. Energy Information Administration.
The 25 percent tax proposed by Mr. Trump would have a “huge impact” on gasoline prices, adding 25 to 75 cents a gallon, particularly hard on consumers in the Great Lakes region, the Midwest and the Rockies.
Agricultural products
As climate change makes farming conditions more difficult in some parts of the United States, the country is increasingly dependent on agricultural products from Mexico.
In 2022, the US imported $44.1 billion worth of agricultural products from Mexico, accounting for one-fifth of all agricultural imports. For example, 90% of avocados consumed in the US are imported, of which 89% come from Mexico. This means that dishes like guacamole and avocado toast would skyrocket in price if a 25% tariff were imposed on agricultural products from Mexico.
Car
In 2023, the US imported $44.76 billion worth of cars from Mexico, making it the number one import item. Mexico has become a global auto manufacturing hub with major manufacturers such as General Motors, Ford and Stellantis.
Nearly all US automakers rely on parts from Mexico because they are significantly cheaper than producing them domestically, but a 25% tariff would likely be a major blow to the industry.
Aside from cars, auto parts were the second-largest import item from Mexico last year.
Ale
Mexico is a major source of alcohol for the United States. According to data from the U.S. Department of Agriculture, more than 80% of beer imported into the United States in the first three quarters of fiscal 2024 came from Mexico. In addition, Mexican tequila and Canadian spirits also played a major role in the growth of U.S. alcohol imports.
The new tariffs would hurt American consumers and cause job losses in the service industry, which is on the path to recovery from the pandemic, according to the Distilled Spirits Council.
Position of Mexico and Canada in exports to the US
The new tariffs that Mr. Trump is expected to impose come as the United States becomes increasingly dependent on imports from Mexico and Canada. For the first time in more than two decades, Mexico has surpassed China as the largest exporter to the United States, with Canada following closely behind in third place.
This means that the tariffs Mr Trump has proposed are almost inevitable for American consumers, as businesses would be forced to pass on the cost burden to buyers.
