United States President-elect Donald Trump has pledged to impose tariffs of 25 percent on Canadian and Mexican imports, and an “additional” 10 percent tariff on Chinese goods as soon as he takes office in January.
Trump, who announced the plans on Monday on his social media platform Truth Social, said the measures were in response to Canada and Mexico’s failure to keep undocumented workers and drugs from flowing across the US border.
He said the additional tariffs on China were a response to the flow of drugs, in particular, the deadly opiate fentanyl, into the US.
The three countries are the US’s largest trade partners, accounting for 43 percent of imports last year worth more than $1.3 trillion, according to the US Census Bureau.
Economists say the tariffs will lead to higher prices of numerous goods in the US, particularly if the measures lead to an escalating war of tit-for-tat trade restrictions among the countries.
“If we take Trump’s threats at face value, then it means come January 20, we will see prices rise immediately,” Nick Marro, lead analyst for global trade at the Economist Intelligence Unit (EIU), told Al Jazeera.
“US companies will feel it first, but there will be a trickle-down effect passed down to US consumers.”
Higher prices at the grocery store would come as Americans are already concerned about the cost of groceries following a spike in prices in the fallout from the COVID-19 pandemic.
An Associated Press survey of US voters in November found that 9 in 10 felt “very or somewhat concerned” about the cost of groceries.
Here are some of the main goods that are likely to get pricer under Trump’s proposals.
Vehicles
North America’s auto industry is a highly integrated enterprise as a result of the North American Free Trade Agreement (NAFTA) and its successor the United States–Mexico–Canada Agreement (USMCA).
Nearly one-quarter of all new vehicles sold in the US in 2023 came from either Mexico or Canada, according to the data analytics firm GlobalData.
In many cases, vehicles move across borders several times before they are finally sold in the US.
Vehicle exports are a huge part of Mexico and Canada’s trade with the US.
Of the $480bn in goods imported by the US from Mexico last year, $130bn was made up of vehicles and vehicle parts, according to UN Comtrade data.
Canadian vehicle and vehicle part imports to the US were worth $56.35bn – second only to energy – according to the same dataset.
The average price of a new vehicle in the US was just north of $48,000 in November, according to Cox Automotive, and analysts say prices could rise by as much as 10 percent.
Some of the companies likely to be most severely affected include Stellantis and General Motors, which import 40 percent and 30 percent, respectively, of all vehicles sold in the US from Canada and Mexico.
The companies own popular brands in the US such as Chevrolet, GMC, Chrysler, Dodge, Jeep and Ram Trucks.
Ford, Volkswagen, Honda, Nissan, Toyota, Mazda and Kia – all of which have factories in Mexico – would also be affected.
Fruit and vegetables
Mexico is a major source of fresh food in the US.
Last year, total agricultural imports were valued at $45.4bn – more than imports from any other country.
Nearly half of fruit and nut imports, and 63 percent of vegetable imports to the US came from Mexico, according to the US Department of Agriculture.
Popular produce from Mexico that is set to become more expensive includes avocados, tomatoes, bell peppers, raspberries and strawberries.
“Tariffs distort the marketplace and will raise prices along the supply chain, resulting in the consumer paying more at the checkout line,” the Produce Distributors Association, an industry trade group, said in a statement this week.
US consumers may not be the only group to face a higher grocery bill.
The US supplies 74 percent of Mexico’s agriculture imports, according to the USDA, primarily in the form of grains, oilseeds and meat.
If Mexico makes good on its promise of tit-for-tat tariffs, prices will rise on these goods, as well.
“US farm exports are a big part of the US trade basket, and I think the farm lobby is already anticipating there to be some blowback,” the EIU’s Marro said.
Meat
Canada supplied the US with $40.1bn of agricultural products last year, primarily meat and vegetable oil.
Imports included $3bn of beef, $1.1bn of pork and $2bn in live animals.
Much like the auto industry, the livestock and meat-processing industries rely on a heavily integrated cross-border supply chain.
Alcohol
The US imported $4.6bn of tequila and mezcal from Mexico in 2023.
Both types of alcohol are popular in cocktails like margaritas, and consumption has surged 160 percent since 2019 as they find a resurgence among US consumers, according to the Distilled Spirits Council of the United States, a lobby group.
Mexican beer brands such as Corona, Modelo Especial and Dos Equis are also popular in the US.
Mexican beer accounts for 83 percent of all US beer imports, worth more than $3bn, according to Mexican trade data.
The US also imported about $537m worth of spirits from Canada last year, including $200m in whisky imports, according to the Distilled Spirits Council. They include brands such as Canadian Club and Crown Royal.
The lobby group said that due to the unique geographic association with these kinds of alcohol, they cannot be “re-shored” to the US.
Crude Oil
Canada is a major source of US energy, providing 60 percent of all crude oil imports in 2023.
This translated to four million barrels of crude oil a day, worth more than $124bn, according to Canadian government data.
Most Canadian crude oil is sent via pipeline to oil refineries in the US Midwest, where analysts say fuel prices would rise in the event of new tariffs.
Canada also supplies almost all US natural gas imports – 99 percent in 2022 – according to the US Energy Information Administration.
While the US is also an exporter of natural gas, the EIA noted that Canadian imports are still important in meeting demand during the winter.
The most visible effect of higher crude oil prices is higher prices at the pump for drivers.
But more expensive crude oil would also drive up the cost of countless goods that use petroleum derivatives, ranging from nylon stockings to fertiliser and medicines.
Electronics
Popular US retailers Walmart and Best Buy say they will likely have to raise prices if Trump makes good on his threats to China.
As well as threatening a 10 percent tariff in retaliation for Chinese fentanyl, Trump said during his campaign that he would impose tariffs of 60 percent or more for what he says are unfair trade practices.
Both companies sell consumer electronics such as video game consoles, computers, televisions, and smartphones – many of which are made in China.
Consumer electronics and lithium-iron batteries made up nearly 30 percent of all US imports from China last year, according to the Atlantic Council.
Tariffs could also trigger supply chain disruptions, potentially leading to delays, shortages, and further costs.
These additional costs will be passed onto consumers, Best Buy CEO Corie Barry told investors in an earnings call this week.
“There’s very little in the consumer space that is not imported,” she said. “These are goods that people need and higher prices are not helpful.”
