Pelected Donald Trump announced a plan to impose tariffs on all imported products from three of America’s largest partners: Mexico, Canada, and China. The move could affect the prices of a range of imported goods, from cars to electronics, experts said.
Trump said on Truth Social on Monday night that he intends to sign an executive order on January 20, 2025, to impose a 25% tariff on all imports from Mexico and Canada, and a 10% tariff on goods from China. He said the prices will be in response to immigrants and drugs, such as fentanyl, traveling across the US border. Trump initially promised in his campaign to establish a tariff of 10-20% on all merchandise, and up to 60% on goods from China. Economists are concerned that his tax plan will increase the prices of certain imported goods and lead to inflation.
“This is a time when US consumers have expressed a lot of dissatisfaction with inflation, and they undoubtedly elected Trump because of that dissatisfaction,” said Kimberly Clausing, former lead economist in the Biden Administration’s Office of Tax Policy. “[Trump’s proposed tariffs] it will be more expensive for US consumers. It will be more expensive for American manufacturers and the creation of US jobs because manufacturing in North America is more concentrated in these borders. “
Read more: What Donald Trump’s Victory Means for Inflation
Higher prices for imported goods may also prompt domestic producers to raise the prices of their goods, according to Alan Deardorff, professor emeritus of economics and public policy at the University of Michigan. Deardorff says the tariffs could lead companies to move production from affected countries.
Trump hasn’t released any details on his plan, so economists say it’s unclear which products will be exempt from tariffs. Here are the top US imports from Mexico, Canada, and China that could be affected by the proposed tariffs.
in Mexico
Mexico is the US’s largest trading partner, according to US Census Bureau data from September. The main products that Mexico exports are cars and car parts, as well as electrical equipment and appliances, such as washing machines, according to data from the Atlas of Economic Complexity. Trump’s proposed tariffs would make these cars and appliances built in Mexico, or cars and appliances assembled in the US but with parts imported from Mexico, more expensive, economists predict.
“[Mexico makes] many components are associated with our manufacturing process, so when you buy a product—whether it’s something as simple as a toaster or a household appliance—some part of that will cost less because of these costs,” Clausing said. “So there will be a direct impact on some things, and an indirect impact on many other things that will increase the price level in the US economy.”
The US also gets food like meat and fish from Mexico, according to Sharyn O’Halloran, a professor of political economy at Columbia University, and Trump’s tariffs could also increase those prices.
Canada
America’s second largest trading partner is Canada. The US is Canada’s leading destination for exports, most of which are crude oil, petroleum gas, lumber, cars and auto parts, according to data from the Atlas of Economic Complexity.
If Trump goes through with his tariff plan, the price of lumber from Canada could rise—and that could increase construction costs in the US, O’Halloran said. The tariffs could also increase the cost of home heating oil, as well as gas prices in the US, according to Clausing.
China
China ranks third among the US’s largest trading partners. The US is the top destination for China’s exports, which mainly include electronics—such as phones, televisions, and computers, according to data from the Atlas of Economic Complexity. Trump’s tariffs could raise the cost of electronics such as phones and televisions sold in the US but made in China.
During the previous Trump administration, US trade officials made exceptions to tariffs imposed on China, including removing tariffs on certain Apple products assembled in China.
It is unclear whether Trump will re-create the exception, or whether he will follow through on his tax plan. But economists worry that, if he does, countries may retaliate.
Mexican President Claudia Sheinbaum responded to Trump’s announcement by suggesting that Mexico will retaliate with its tariffs against US Canadian Prime Minister Justin Trudeau spoke to Trump about the proposed tariffs, saying that they had a “good” phone call to discuss the situation. Many Canadian officials have criticized Trump’s proposed tariffs, and Ontario Premier Doug Ford has said Canada will have to retaliate if Trump goes through with his plan.
“It will be very bad for the North American economy if this situation happens as promised. We hope it’s an ironic prank,” Clausing said. “The problem with that prospect is that Trump built his whole campaign around higher taxes. I find it hard to imagine that this was all nonsense.”
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