


President Donald Trump will impose 25% tariffs on goods from Mexico and Canada starting Tuesday, the president has confirmed, despite suggestions from some White House officials that he might pick a lower tariff rate—potentially leading to price hikes on a range of imported goods, from food and alcohol to cars.
U.S. President Donald Trump speaks to members of the media before boarding Marine One on the South ... [+]
It’s unclear how much of the added cost of the Canadian and Mexican tariffs businesses could transfer to consumers, but most economists believe tariffs lead to higher prices.
The 25% tariffs on Canadian and Mexican goods, and a separate 10% tariff on all other imports that Trump proposed during the campaign, may cause prices on around a quarter of all consumer spending to rise 0.81% if businesses pass along half the costs, or 1.63% if the costs are fully transferred, according to a Federal Reserve Bank of Atlanta study.
The 25% Canada and Mexico tariffs would amount to an estimated total tax increase of between $120 billion and $225 billion, according to Jacob Jensen, a trade policy analyst at the center-right think tank the American Action Forum, told the Associated Press, while the Tax Policy Center estimates after-tax income would fall by $930 on average next year from the tariffs on Mexico and Canada, and the Peterson Institute for Economics predicts the tariffs on Canada, Mexico and China would cost the typical U.S. household $1,200 a year.
Groceries: A significant portion of food products, from meat and grains to fresh vegetables, are imported from Canada and Mexico—Canada is the largest exporter of meat to the U.S., while 77% of fresh vegetables were imported from Mexico and 11% were imported from Canada in 2020, according to the USDA.
Alcohol: The U.S. imported about $26 billion in alcohol from Mexico in 2022, while 18% of beer consumed from the U.S. stems from Mexico, according to the USDA.
Gas prices: Canada is the source of about 20% of oil used by Americans, while Canada and Mexico together account for 70% of U.S. crude imports—a 25% tariff could hike gas prices by 30 to 40 cents per gallon, GasBuddy head of petroleum analysis Patrick De Haan predicted to CBS last year, though Trump said earlier this year Canadian energy and oil exports would be subject to a lower 10% tariff.
Lumber: Canada is the largest supplier of lumber to the U.S., and the tariffs could lead the price per thousand board feet to jump to $600, up from just under $590, according to the Forest Resources Association; Trump last week also ordered the Commerce Department to investigate whether lumber imports threaten national security as White House officials argue the U.S. should be self-sufficient in the lumber industry and that existing policies have driven up construction and housing costs.
Cars: The average price of a new car would increase by an estimated $3,000, as 22% of all vehicles sold in the U.S. are imported from Mexico and Canada, according to S&P Global, while a study by Anderson Economic Group cited by multiple outlets estimates a $9,000 price increase for a large SUV with a significant number of parts produced in Mexico and $8,000 for a pickup truck.
$900 billion. That’s the total value of Canadian and Mexican imports to the U.S. each year, according to the Brookings Institution.
The tariffs are expected to take effect at 12:01 a.m. Tuesday, Trump confirmed Monday, despite Commerce Secretary Howard Lutnick suggesting a day earlier Trump could modify the tax level as both countries have made progress firming up border security. Trump’s confirmation prompted almost an immediate decline in the stock market, with the S&P falling more than 2%, putting it on pace for its worst day this year.
An additional 10% tariff on Chinese goods is also set to take effect Tuesday, on top of the 10% tariff Trump imposed that took effect Feb. 1.
Trump officially announced on Feb. 1 he would impose a 25% tariff on all imports from Canada and Mexico, with an exception for Canadian energy and oil experts, which would be taxed at 10%. While Trump hasn’t explicitly detailed what the countries can do to alleviate the tariffs, he has cited the flow of fentanyl from both countries, in addition to China, in threatening to impose the levies. Days after his initial announcement, Trump said he would delay the tariffs for a month amid negotiations with Canadian and Mexican leaders and assurances from both countries that they would do more to meet Trump’s demands on fentanyl and the border. Despite experts’ warnings about the cost to consumers, Trump told reporters Thursday “it’s a myth.”
How Will Tariffs Impact You? Here’s What To Know About Trump’s Plans (Forbes)