Merchandise That Might Get Extra Costly With Trump’s Tariffs On Mexico And Canada

President Donald Trump stated this week that tariffs on U.S. neighbors Canada and Mexico will arrive Saturday. The 2 nations will not be solely shut geographically, however economically as properly.

The enterprise between the North American nations now exceeds China, totaling $1.8 trillion in 2023. That’s far better than the $643 billion in commerce that the U.S. did with China in that very same yr.

Following are just some imported items that may very well be hit first.

For many years, auto firms have constructed provide chains that cross the borders of america, Mexico and Canada. Multiple in 5 of the vehicles and lightweight vans bought in america had been inbuilt Canada or Mexico, in keeping with S&P International Mobility. In 2023, america imported $69 billion price of vehicles and lightweight vans from Mexico – greater than every other nation ― and $37 billion from Canada. One other $78 billion in auto elements got here from Mexico and $20 billion from Canada. The engines in Ford F-series pickups and the long-lasting Mustang sports activities coupe, for example, come from Canada.

“You have engines and car seats and other things that cross the border multiple times before going into a finished vehicle,’’ said Cato’s Lincicome. “You have American parts going to Mexico to be put into vehicles that are then shipped back to the United States.

“You throw 25% tariffs into all that, and it’s just a grenade.’’

In a report Tuesday, S&P Global Mobility reckoned that “importers are likely to pass most, if not all, of this (cost) increase to consumers.’’ TD Economics notes that average U.S. car prices could rise by around $3,000 – this at a time when the average new car already goes for $50,000 and the average used car for $26,000, according to Kelley Blue Book.

Canada is by far America’s biggest foreign supplier of crude oil. From January through November last year, Canada shipped the U.S. $90 billion worth of crude, well ahead of No. 2 Mexico at $11 billion.

For many U.S. refineries, there’s not much choice. Canada produces the “type of crude oil that American refineries are geared to process,’’ Lincicome said. “It’s a heavier crude. All the fracking and all the oil and gas we make here in the United States – or most of it – is a lighter crude that a lot of American refineries don’t process, particularly in the Midwest.’’

Trump said Thursday that he hasn’t yet decided whether to include Canadian and Mexico oil in the tariffs he still plans impose Saturday.

If he did tax Canadian oil imports, Lincicome said, “how the heck does that shake out? My guess is that it shakes out just through higher gas prices, particularly in the Midwest.’’ TD Economics figures that Trump’s tariffs could push up U.S. gasoline prices by 30 cents to 70 cents a gallon.

Tariffs would raise the price for those raising a glass of tequila or Canadian whisky.

In 2023, the U.S. imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico, according to the Distilled Spirits Council of the United States, a trade group. The U.S. imported $537 million worth of Canadian spirits, including $202.5 million worth of whisky.

Canada and Mexico were also the second- and third-largest importers of U.S. spirits in 2023, behind the European Union, the council said.

The council said the U.S. is already facing a potentially devastating 50% tariff on American whiskey by the European Union, which is set to begin in March. Imposing tariffs on Mexico and Canada could pile even more retaliatory action on the industry.

Chris Swonger, the council’s president and CEO, said he appreciates the goal of protecting U.S. jobs. But tequila and Canadian whisky – like Kentucky bourbon ― are designated as distinctive products that can only be made in their country of origin.

“At the end of the day, tariffs on spirits products from our neighbors to the north and south are going to hurt U.S. consumers and lead to job losses across the U.S. hospitality industry, just as these businesses continue their long recovery from the pandemic,” Swonger stated.

For American shoppers nonetheless exasperated by excessive grocery costs, a commerce struggle with Canada and Mexico may very well be painful. In 2023, the U.S. purchased greater than $45 billion in agricultural merchandise from Mexico –together with 63% of imported greens and 47% of fruits and nuts. Farm imports from Canada got here to $40 billion. A 25% tariff may push costs up.

“Grocery shops function on actually tiny margins,’’ Lincicome stated. “They will’t eat the tariffs … particularly once you speak about issues like avocados that principally all of them – 90% ― come from Mexico. You’re speaking about guacamole tariffs proper earlier than the Tremendous Bowl.’’

U.S. farmers are nervous, too, that Canada and Mexico will retaliate by slapping tariffs on American merchandise resembling soybeans and corn. That’s what occurred within the first Trump administration. China and different targets of Trump tariffs hit again by concentrating on the president’s supporters in rural America. Exports of soybeans and different farm merchandise dropped, so Trump spent billions of U.S. taxpayer cash to reimburse farmers for misplaced gross sales.

“President Trump was pretty much as good as his phrase,’’ stated Mark McHargue, a Central Metropolis, Nebraska, farmer who grows corn, soybeans, popcorn and raises hogs. “It did take the sting out of it. That’s for certain.’’ However he would favor to see the federal government push to open international markets to American farm exports. “We’d slightly get our cash from the market,’’ stated McHargue, president of the Nebraska Farm Bureau. “It doesn’t really feel nice to get a authorities test.’’

Related Press Author Josh Boak in Washington contributed this story.