By Danielle Kaye
President Donald Trump’s tariffs target countries that are major suppliers of a wide range of goods to the United States.
For American families, the likely result is higher prices nearly everywhere they turn — in grocery aisles, at car dealerships, at electronics stores and at the pump.
On Tuesday, new levies on goods imported from Mexico, Canada and China went into effect, according to executive orders issued by the Trump administration.
— All products coming from China are subject to a 20% tax, up from 10%.
— All goods imported from Mexico and most goods from Canada are subject to a 25% tariff. These tariffs were originally set to take effect at the start of February, but Trump delayed them by a month.
— Canadian energy products will face a lower 10% tariff.
Moments after Trump’s tariffs went into effect, China’s Finance Ministry placed 15% tariffs on imports of chicken, wheat, corn and cotton from the United States and 10% tariffs on imports of other agricultural products. Canada imposed 25% tariffs on $30 billion worth of goods, but it did not specify which products would be affected. President Claudia Sheinbaum of Mexico is expected to address the issue at a news conference Tuesday.
The swift retaliation by China, Canada and Mexico might not directly affect U.S. consumer prices, but is expected to hurt farmers, manufacturers and other U.S. companies.
While Trump acknowledged in February that his new tariffs could cause “some pain,” he has insisted that they will not substantially increase prices for Americans and that foreign countries will bear the brunt.
In an interview with CNBC on Monday, the White House trade adviser, Peter Navarro, said the effect of tariffs on consumer prices would be relatively “small,” given the administration’s simultaneous plans to deregulate industry, reduce the size of the federal government and expand energy production.
But trading data and economic studies suggest that consumers in the United States will probably see higher prices on a wide range of products, from vegetables and meat to cellphones and cars. While some companies may opt against passing on the cost of the tariff, many are likely to raise prices on their products.
“Because of the combination of these three countries, it’s going to be difficult to go down an aisle of a grocery store and not see some sort of inflationary effect,” said Jason Miller, a professor of supply chain management at Michigan State University.
What should shoppers expect in the grocery aisles?
Fresh produce, much of which is imported from Mexico, is one of the first categories where shoppers might notice an uptick in prices. It could happen within a couple of weeks after the tariffs on Mexican goods take effect. These items, including avocados, tomatoes and strawberries, have a short shelf life. Grocery stores lack substantial inventory, meaning that consumers will quickly find produce that is subject to Trump’s tariffs.
Price increases are poised to hit liquor aisles, too, especially beer and tequila. In 2023, nearly three-quarters of U.S. agricultural imports from Mexico consisted of vegetables, fruit, beverages and distilled spirits, according to the U.S. Department of Agriculture.
The United States also imports a range of agricultural products from Canada, including meat and grains. Trump’s 25% tariff on most imports from its northern neighbor could push up retail prices for beef, if grocery stores pass the costs on to consumers. Maple syrup could also become more expensive. Canada accounts for roughly 70% of global maple syrup production, and in 2023, more than 60% of its maple exports went to the United States, according to data from the Canadian government.
This added burden comes as many Americans have already been experiencing sticker shock at their supermarkets. Data from the Labor Department showed that in January, grocery prices — which had been relatively flat in late 2023 and early 2024 — rose again, led by the price of eggs.
Could car prices increase, too?
Yes, the tariffs are widely expected to raise prices that American consumers pay for new automobiles. That’s because auto manufacturers ship tens of billions of dollars’ worth of finished vehicles, as well as engines, transmissions and other components, each week across the U.S. borders with Canada and Mexico. Billions of dollars more are imported from parts manufacturers in China.
New cars and trucks are selling at near-record prices. Trump’s tariffs could add to the challenges for consumers looking to buy a car.
General Motors, the largest U.S. automaker, will probably feel the impact of the tariffs more acutely than some other automakers. GM plants in Canada and Mexico produced nearly 40% of all vehicles the company made last year in North America. The effect could also fall heavily on car companies facing financial trouble, including Nissan and Stellantis.
But how tariffs will affect car prices will probably be more varied compared with food, Miller said. Vehicles assembled in states including Michigan, Ohio, Kentucky and Indiana tend to rely heavily on auto parts imported from Canada, he said, which is not the case across the board.
“There’s just a lot more complexity to understanding increases in prices that consumers could eventually see,” Miller said.
What other products might be affected?
U.S. drivers, particularly in the Midwest, may see higher prices at the pump. Trump’s 10% tariff on Canadian energy is not as steep as he initially indicated it would be, and it’s lower than tariffs on other Canadian goods. But the tax nevertheless threatens to disrupt the U.S. oil and gas industry, which is highly dependent on Canadian oil. Roughly 60% of the oil that the U.S. imports comes from Canada.
Analysts expect the additional costs to be borne by a combination of oil producers in Canada and Mexico, U.S. refineries and American consumers. How the tariffs ripple through the market will depend partly on how long they remain in place.
Consumer electronics — among the top goods imported into the United States from China last year — could also get more expensive. From cellphones and computers to video games, shoppers could see prices start to rise within a couple of months.
Another product likely to be affected is lumber, about 30% of which is imported from Canada. Tariffs on softwood lumber could raise the cost of building houses, which risks worsening the housing affordability crisis weighing on millions of American families. More than 70% of the imports of two essential materials that homebuilders rely on — softwood lumber and gypsum, which is used for drywall — come from Canada and Mexico, according to the National Association of Home Builders.
“Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices,” Carl Harris, chair of the association, said in a statement last month, before Trump delayed his tariffs on Canada.
On top of the broad tariffs on Canadian imports, Trump on Saturday initiated an investigation into whether imports of lumber, specifically, threaten America’s national security.
What about across-the-board inflation?
Analysts at Goldman Sachs have said that if Trump proceeds with across-the-board tariffs, it will raise prices in the United States and slow economic growth. Most economists expect that the fresh trade barriers could lead to a temporary burst of higher inflation.
Inflation has eased back down toward the Federal Reserve’s 2% target after the central bank raised interest rates aggressively in recent years and kept them at high levels. But the Fed remains alert to anything that could stall progress toward that goal — including Trump’s tariffs.
