Food, fuel, steel, and more: What could get expensive in US after Trump imposes tariff on Canada, Mexico 'to protect Americans' – The Times of India
US President Donald Trump signed an order on Saturday imposing tariffs on imports from Mexico, Canada, and China. In response, Mexico and Canada announced countermeasures, escalating trade tensions.
Trump said on social media that the tariffs were necessary “to protect Americans.” He urged the three countries to take more action against the production and export of illicit fentanyl and called on Mexico and Canada to reduce illegal immigration into the US The tariffs fulfill one of Trump’s commitments to voters but could affect the global economy and impact his goal of reducing prices.
Economists warn that these tariffs could worsen inflation, making it harder for consumers to afford goods such as groceries, gasoline, housing, and cars.
Here’s what could get pricier in US
Food products
Prices for fruits, vegetables, and nuts from Mexico could increase, including avocados, which are widely consumed during the Super Bowl on February 9.
In 2023, the US imported over $45 billion in agricultural goods from Mexico, including strawberries, raspberries, tomatoes, and beef, according to the US Department of Agriculture. Other imports include Mexican beer, tequila, and spirits.
Canada exported about $40 billion in agricultural products to the US in the same year, including beef, pork, grains, potatoes, and canola oil. A 25 per cent tariff could raise prices for these items.
Fuel and energy
In 2023, the US imported $97 billion worth of oil and gas from Canada. Since the expansion of Canada’s Trans Mountain pipeline, the US has become more dependent on Canadian oil, according to the US Energy Information Administration.
The tariff on Canadian energy products is set at 10 per cent , lower than the 25 per cent rate for other Canadian exports.
Gas prices are usually lower in February due to weak demand. However, if tariffs remain in place through the summer, the impact could be greater.
Certain regions will be affected more than others. Most Canadian oil is transported to Midwest refineries by pipeline. According to a report by CNN, states likely to see the biggest effects include Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, Pennsylvania, South Dakota, and Wisconsin.
Impact of tariffs on car prices in the US
American consumers are increasingly purchasing vehicles built in Canada or Mexico, or those that contain parts imported from these countries. In 2023, the US imported $69 billion worth of cars and light trucks from Mexico and $37 billion from Canada, according to S&P Global Mobility.
Additionally, auto parts worth $78 billion came from Mexico, while Canada supplied $20 billion in parts. For example, engines for Ford’s F-series pickup trucks are manufactured in Canada.
With tariffs expected to increase costs for importers, these expenses are likely to be passed on to consumers. As per a report by CBS news, the price of an average car in the US could rise by about $3,000.
Price of steel to go up
The United States, though no longer a manufacturing-heavy economy, still consumes tens of millions of tons of steel annually, supporting industries such as automaking, oil production, construction, and infrastructure.
Canada and Mexico are key steel suppliers to the US, ranking first and third in exports, respectively. During his first term, President Trump imposed a 25 per cent tariff on steel imports from most countries in June 2018. However, Mexico and Canada were exempt under their free trade agreements with the US.
Currently, Canada supplies nearly 25 per cent of the steel imported by American businesses by weight, while Mexico accounts for about 12 per cent , according to government data from the American Iron and Steel Institute, an industry trade group.
Other products
Apart from the above mentioned things, Beer and alcohol; Home construction and furniture; Electronics, toys, appliances may also get expensive.
