Newark Port Container Terminal was in Newark, New Jersey on March 3, 2025.
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Tariffs to Canada and Mexico Effective Tuesday – According to economists, they will inevitably raise prices for consumers in unexpected ways.
Tariffs are taxes on foreign imported goods and are paid by specific interests in importing U.S. entities.
President Trump on Tuesday 25% tariffs on Canada and Mexicothe two largest trading partners of the United States. Trump has set a lower 10% tariff on Canadian energy.
Economists say businesses often transfer some of the extra fees of tariffs to consumers.
Economists say that certain products, such as fruits and vegetables from Mexico and oil from Canada (which are one of the major exports to the United States) will become more expensive.
But there are also far-reaching implications across supply chains, they say.
“Tariffs will run through complex supply chains in ways that are not always obvious, moving in ways that are not always obvious,” Travis Tokar, a professor of supply chain management at Texas Christian University, wrote in an email.
Tokar said this dynamic enables the challenge of predicting precise product and price impact.
For example, take a fast food chicken sandwich. Tokar said that while the foil used in its packaging may come directly from Canada or Mexico, it could push for the cost that can be transferred to consumers.
Tokar said nearly all the goods purchased by consumers are transported by trucks of refined petroleum products fueled, meaning tariffs may have a wider impact on Canadian crude oil than at first glance. ”
The United States is almost half of the foreign fuel from Canada. according to Peterson School of International Economics.
“Costs ultimately have to go through the supply chain,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics.
How much tariffs might a typical person cost
The U.S. traded $1.6 trillion in 2024, according to the Census Bureau. data As of December.
January’s January analyze by Urban-Brookings Tax Policy Center.
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Description of PIIE analyze. (The analysis only considers Trump’s 10% tariff on Chinese imports in February; he proposed another 10% tariff on Tuesday.)
Cute says that the PIIE evaluation of consumer impact is “conservative”.
First, she said, this does not consider how domestic manufacturers deal with less foreign competition.
“These tariffs will raise the price of imported goods” and domestic producers may raise their prices to “matches” to foreign peers,” said Alexander Field, a professor of economics at Santa Clara University.
The “great destructive” of the automotive industry
Consumer impact will also depend on specific industries and companies.
Economists expect the automotive industry to be the most affected sector as automakers build extensive supply chains in North America.
For example, a new car assembled in Alabama seems unaffected by tariffs — but many of these auto parts may come from Mexico or Canada, Tokar said.
According to a Bank of America Global Research statement, major automakers such as Ford, General Motors and Stratlandis may “could face higher production costs due to their reliance on cross-border supply chains that rely on parts and vehicles.”
All in all, the tariffs in Canada and Mexico can Add nearly $6,000 to the cost of a carAccording to estimates from Investment Bank Benchmark Co., February. That dynamic is Car insurance is expected.
“This will be a huge disruption to the automotive industry,” said Douglas Irwin, an economics professor at Dartmouth College.
Fresh produce can be seen at quick prices for hiking
President Donald Trump signed an executive order in the Oval Office on February 25, 2025. Trump directed the Commerce Department to investigate potential tariffs on copper imports.
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Target CEO Brian Cornell says Mexico’s tariffs May force companies to raise prices of fruits and vegetables – Including strawberries, avocados and bananas – within a few days.
According to Yale University’s Budget Laboratory analyze Canada, Mexico and China tariffs. Prices of fresh produce will rise by nearly 3%.
According to PII, building materials are also exported in large quantities from Canada – including 40% of the U.S. wood products.
“If you’re doing a renovation this summer, you’re unfortunate,” Lovely said.
Lovely said big companies may have the ability to absorb some tariff costs instead of passing everything on to consumers. But agricultural producers may not be able to do this, for example, because there are often very low profit margins in the supply chain”, she said.
Even businesses that absorb some of the costs (to avoid immediate sticker shock to consumers), which means they invest in new equipment, hiring workers or developing new products less profits, which creates “economic resistance, but still significant but still large.”
Revenge is also effective
Consumers will also receive Foreign retaliation against U.S. trade – Officials who have committed to Mexico, Canada and China.
“You are not going to put these tariffs into practice without expecting revenge, and that’s happening,” Field said.
Canadian Prime Minister Justin Trudeau Tuesday Announced 25% tax on US imports worth CAD 30 billioneffective immediately. He said tariffs on another $125 billion of U.S. goods will take effect within 21 days.
Trump responded to the measure Tuesday, which announced additional tariffs on Canada.
Ontario will impose a 25% tax on electricity from 1.5 million households in Minnesota, Michigan and New York in retaliation for Trump’s tariffs, the province’s leader Doug Ford told the province. Wall Street Journal.
China also announced retaliatory tariffs of up to 15% targeting U.S. agriculture. For example, U.S. corn will face a 15% tax, while soybeans will be subject to a 10% tax rate. Mexican President Claudia Sheinbaum plans to announce retaliation measures on Sunday.
