U.S. President-elect Donald Trump speaks at a House Republicans Conference meeting at the Hyatt Regency on Capitol Hill on Nov. 13, 2024 in Washington, D.C. Credit – Allison Robbert-Pool—Getty Images
President-elect Donald Trump has announced a plan to impose tariffs on all products imported from America’s three largest trading partners: Mexico, Canada, and China. The move could impact the prices of a range of imported goods, from cars to electronics, experts say.
Trump said on Truth Social on Monday night that he intends to sign an executive order on Jan. 20, 2025, to charge Mexico and Canada a 25% tariff on all products coming into the U.S., and a 10% tariff on goods from China. He said the tariffs would be in response to migrants and drugs, such as fentanyl, traveling across U.S. borders. Trump initially promised during his campaign to institute a 10-20% tariff on all imports, and as high as 60% on goods from China. Economists worry that his tariff plan will raise the prices of some imported goods and lead to inflation.
“This is a time when U.S. consumers have expressed a lot of dissatisfaction with inflation, and arguably elected Trump because of that dissatisfaction,” says Kimberly Clausing, former lead economist in the Biden Administration’s Office of Tax Policy. “[Trump’s proposed tariffs] will be quite expensive for U.S. consumers. It will also be very costly for U.S. manufacturers and U.S. job creation because North American manufacturing is very integrated across these borders.”
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The higher prices of imported goods could also prompt domestic producers to raise the prices of their goods, according to Alan Deardorff, emeritus professor of economics and public policy at the University of Michigan. Deardorff says the tariffs could lead to companies moving production out of impacted countries.
Trump hasn’t released further details about his plan, so economists say it’s unclear what, if any, products will be exempted from the tariffs. Here are the top imports the U.S. gets from Mexico, Canada, and China that could be impacted by the proposed tariffs.
Mexico
Mexico is the U.S.’s top trading partner, according to U.S. Census Bureau data from September. The main products Mexico exports are cars and car parts, as well as electrical machinery and appliances, such as laundry machines, according to data from The Atlas of Economic Complexity. Trump’s proposed tariffs could make these cars and appliances built in Mexico, or cars and appliances assembled in the U.S. but that have parts imported from Mexico, more expensive, economists predict.
“[Mexico makes] a lot of parts associated with our manufacturing production, so when you buy a product—it could be something simple like a toaster or a household appliance—some part of that will be a little more expensive because of these tariffs,” Clausing says. “So there’s going to be some really direct impact on certain items, and an indirect impact on many other items that will push up price level in the U.S. economy.”
The U.S. also gets foods like meat and fish from Mexico, according to Sharyn O’Halloran, professor of political economy at Columbia University, and Trump’s tariffs could drive up those prices too.
Canada
America’s second-largest partner is Canada. The U.S. is the top destination for Canada’s exports, the majority of which are crude oils, petroleum gas, lumber, and cars and car parts, according to data from The Atlas of Economic Complexity.
If Trump follows through on his tariff plan, the price of lumber imported from Canada could go up—and, in turn, that could increase construction costs in the U.S., O’Halloran says. Tariffs could also raise the cost of home heating oil, as well as gas prices in the U.S., according to Clausing.
China
China ranks third among the U.S.’s main trading partners. The U.S. 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 increase the cost of electronics like phones and televisions sold in the U.S. but made in China.
During the previous Trump Administration, U.S. trade officials created some exceptions to tariffs imposed on China, including removing tariffs on certain Apple products assembled in China.
It’s unclear if Trump will create exceptions again, or if he’ll follow through with his tariffs plan. But economists are concerned that, if he does, countries may retaliate.
Mexico’s President Claudia Sheinbaum responded to Trump’s announcement by suggesting that Mexico would retaliate with tariffs of their own against the U.S. Canada’s Prime Minister Justin Trudeau spoke to Trump about the proposed tariffs, saying afterward that they had a “good” phone call discussing the situation. Many Canadian officials have slammed Trump’s proposed tariffs, and Ontario Premier Doug Ford said that Canada would have to retaliate if Trump follows through with his plan.
“It’s going to be very bad for the North American economy if this scenario unfolds as promised. We can hope that it’s just an elaborate bluff,” Clausing says. “The problem with that hope is that Trump has built his whole campaign around high tariffs. I find it hard to think that it was all just a bluff.”
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Publish date : 2024-11-27 05:21:00
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