American consumers could soon see higher prices on everyday goods—from automobiles to avocados—if the Trump administration follows through with its plan to impose steep new tariffs on imports from Mexico and Canada starting February 1.
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White House spokeswoman Karoline Leavitt announced that President Trump will implement a 25% tariff on imports from Mexico and Canada, along with an additional 10% tariff on goods from China.
While the administration frames tariffs as duties imposed on foreign countries, U.S. businesses actually pay these costs, which often results in price increases for consumers. Instead of absorbing the extra expense, companies typically pass it along through higher prices on imported goods, making everything from food to fuel more expensive.
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Who Bears the Cost?
“If there is a significant increase in tariffs, those costs will likely be passed onto U.S. consumers and businesses,” said Brian Peck, executive director at the University of Southern California’s Center for Transnational Law and Business.
The United States imports a variety of essential goods from Canada and Mexico:
- Canada supplies oil, lumber, wood, and cement, all crucial for construction and energy.
- Mexico accounts for more than 20% of U.S. agricultural imports, including fruits, vegetables, and meats.
One pressing question is whether the Trump administration will allow exceptions for specific imports, such as oil and gas. Since Canada supplies about 20% of the oil consumed in the U.S., a 25% tariff could increase gas prices by 30 to 40 cents per gallon almost immediately, according to Patrick De Haan, head of petroleum analysis at GasBuddy.
While American consumers will feel the pinch, the greatest economic impact could hit Canada and Mexico. Wendong Zhang, an assistant professor at Cornell University, estimates that a 25% tariff would cause Canada’s economy to shrink by 3.6% and Mexico’s by 2%, while the U.S. would see a relatively smaller 0.3% decline in GDP.
Products That Could Become More Expensive
Food Prices on the Rise: Avocados, Beef, and More
At a time when inflation has already made groceries more expensive, the cost of fresh produce and meat could surge even higher.
The U.S. imports over $45 billion in agricultural products from Mexico annually, including:
- Avocados, strawberries, and tomatoes
- Raspberries and nuts
- Beef and pork
- Mexican beer, tequila, and spirits
Similarly, Canada supplies about $40 billion in agricultural goods, such as:
- Grains and potatoes
- Beef and pork
- Canola oil
With grocery stores operating on razor-thin profit margins, they cannot afford to absorb these tariff costs.
“You’re talking about guacamole tariffs right before the Super Bowl,” noted Scott Lincicome, vice president of general economics at the Cato Institute, referencing the 90% of avocados in the U.S. that come from Mexico.
Cars Could Cost Thousands More
The U.S. relies heavily on vehicle imports from Canada and Mexico, making new and used cars another major sector affected by the tariffs.
In 2023 alone, the U.S. imported:
- $69 billion in cars and trucks from Mexico
- $37 billion in cars and trucks from Canada
- $78 billion in auto parts from Mexico
- $20 billion in auto parts from Canada
For example, Ford’s F-series pickup truck engines are built in Canada, making them subject to the new tariff.
According to TD Economics, the average price of a new vehicle could increase by $3,000 if automakers pass these additional costs onto consumers.
This comes at a time when:
- The average new car price is already $50,000
- The average used car price is around $26,000
Higher tariffs could make vehicles even less affordable, just as Americans are grappling with rising auto loan interest rates.
Lumber Prices May Surge, Affecting Housing Costs
Softwood lumber is another major import from Canada, accounting for one-third of the U.S. supply each year. A 25% tariff on Canadian lumber could create a supply shock, the Forest Resources Association warned in a recent report.
Although lumber prices are expected to rise, some economists believe high mortgage rates (hovering near 7%) could slow the U.S. housing market, making it harder for companies to pass these higher costs onto buyers.
Still, builders and homebuyers alike could see increased costs, especially if demand for new housing picks up in the coming months.
The Bottom Line: Consumers Will Pay More
The Trump administration’s broad tariff strategy is poised to increase costs across multiple sectors—including food, automobiles, and home construction materials. While the White House argues that tariffs protect American industries, they ultimately translate into higher prices for consumers and businesses.
As these tariffs take effect, Americans may soon feel the impact at the grocery store, the gas pump, the car dealership, and in home construction costs—adding new financial pressures at a time when inflation remains a concern.
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