CNN
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American consumers and businesses stand to pay a hefty price for the tariffs President Donald Trump enacted on the nation’s top three trading partners.
With only a slim exemption for some Canadian energy products, everything the US imports from those three nations is subject to tariffs of at least 20%, in the case of China, and 25% for Mexico and Canada.
Americans won’t necessarily feel the full effects of tariffs immediately but the import taxes could raise prices of just about everything, especially given that over 40% of the goods America imported last year came from the nations Trump targeted.
Just how high prices will get – and when – all depend on the extent to which businesses will absorb the higher cost of tariffs or reconfigure their supply chains to minimize costs, as well as how much inventory they have on hand.
Here’s where Americans could feel the sting hardest:
Mexico and Canada supply a significant share of several key food categories. For example, Mexico is the largest supplier of fruit and vegetables to the United States, while Canada leads in exports of grain, livestock and meats, poultry and more.
Agricultural products from Mexico and Canada, in particular, could become more expensive for consumers, as grocery retailers operate on thinner profit margins than most industries. With little room to absorb higher tariff costs, the grocers may have to pass them on to shoppers.
Target CEO Brian Cornell said in an interview with CNBC on Tuesday that Trump’s tariffs on Mexico may force the company to raise prices on fruits and vegetables as soon as this week. Cornell said Target relies heavily on Mexican produce imports during the winter.
“Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he said.
Although the US typically exports more agricultural goods than it imports, the value of imports has increased faster than that of exports in the past decade, according to the US Department of Agriculture. Additionally, climate change has increased US reliance on countries like Mexico, where growing conditions are more favorable.
Last year, the US imported $46 billion of agricultural products from Mexico, according to USDA data. That includes $8.3 billion worth of fresh vegetables, $5.9 billion of beer and $5 billion of distilled spirits.
But the biggest category of agricultural imports from Mexico last year was fresh fruits, of which the US imported $9 billion worth, with avocados accounting for $3.1 billion of that total.
And on top of the tariffs on Mexico, Canada and China, Trump also on Monday floated a separate tariff on agricultural imports, which could further increase the price of foods coming from these countries and worldwide.
Consumer electronics are among the top goods the US imported from China last year, according to federal trade data. That includes cellphones, TVs, laptops, video game consoles, monitors and all the components that power them.
China also is a major supplier of home appliances. Those along with toys and footwear are particularly exposed to Trump’s tariff threats.
A staggering 99% of shoes sold in the United States are imported, according to the Footwear Distributors & Retailers of America, a trade group that represents Nike, Steve Madden, Cole Haan and other footwear brands.
More than half (56%) of shoes sold in the United States are made in China, the trade group said.
The United States is also reliant on China for toys and sporting equipment, including items such as footballs, soccer balls and baseballs. The United States gets 75% of its imported toys and sports equipment from China.
Cars and car parts
Cars sold in America are no longer purely American-made. In many cases, parts cross between the Mexican and Canadian borders several times before a car is completed –– either in the US or a neighboring country. Automakers built plants across North America in what had been a free trade zone.
“There’s probably not a vehicle on the market today that wouldn’t be affected in some form or fashion by tariffs,” Peter Nagle, automotive economist for S&P Global Mobility, told CNN. “I would think prices would start to change in the one-to-two weeks after the tariffs go into effect.”
The cost of producing cars throughout North America will rise between $3,500 and $12,000, according to analysis of both public and private data by the Anderson Economic Group, a Michigan-based think tank. And because it won’t make sense to make some of the models at those higher costs, particularly cars with cheaper option packages, there are likely to be cutbacks in production, and jobs, across the industry, said Patrick Anderson, the group’s CEO.
“Producers will stop making some of the models,” Anderson predicted. And he said the suggestion by Trump that automakers will quickly shift production back to the United States in response isn’t at all realistic. That’s an expensive proposition that could take years to achieve.
