Shoppers could see higher produce prices within a matter of days after a 25% tariff on Mexican and Canadian imports took effect Tuesday, Target CEO Brian Cornell warned—as the levies sparked retaliatory measures from Canada and China and fears of a trade war.
Target CEO Brian Cornell warned produce prices at the retailer could spike in a matter of days after ... [+]
Consumers “will likely see price increases over the next couple of days” on fruits and vegetables, Cornell told CNBC Tuesday, noting that the U.S. depends on Mexico for a “significant amount of supply” during the winter months.
Mexico and Canada supplied 51% and 2%, respectively, of fresh fruit imports, and 69% and 20%, respectively, of fresh vegetable imports in 2022, according to the USDA.
Cornell said the 10% additional tariff on Chinese imports, on top of the 10% tariff imposed earlier this year, was less of a threat to immediate price hikes at Target as the retailer has reduced its reliance on Chinese imports from 60% to 30% over the past few years.
The 25% tariffs on Mexican and Canadian imports, plus the additional 10% levy on Chinese imports, took effect at 12:01 a.m. Tuesday, prompting retaliatory measures from China and Canada. China said it would impose an additional 15% tariff on a range of products, including chicken, wheat and cotton, and expand export controls. Canadian Prime Minister Justin Trudeau also announced a 25% duty against $155 billion worth of American goods, part of which will go into effect immediately with the rest delayed 21 days. Economists anticipate the tariffs could lead to price hikes on a range of products, depending how much of the additional cost companies transfer to consumers. A Federal Reserve Bank of Atlanta study estimates they could lead to 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. The Trump administration hasn’t set clear benchmarks for what the countries can do to alleviate the tariffs, but has cited the flow of fentanyl into the U.S. from all three countries and a need for stricter border controls from Mexico and Canada in announcing the tariffs.
Mexican President Claudia Sheinbaum said Tuesday she will announce early next week which U.S. products will be subject to retaliatory tariffs.“It’s inconceivable that they don’t think about the damage this is going to cause to United States citizens and businesses with the increase in prices for things produced in our country,” Sheinbaum said. “Also the damage it will cause by stopping job creation in both countries. No one wins with this decision.”
Trump’s 25% Tariffs On Canada And Mexico Start Today—Here’s How They Could Impact Prices (Forbes)
China, Canada And Mexico Are Retaliating As Trump’s Tariffs Go Into Effect—Here’s How (Forbes)