Economists Warn: Trump's Tariffs On Canada, Mexico And China Could Hurt Your Budget More Than Help It

President-elect Donald Trump's promise to impose 25% tariffs on goods from Canada and Mexico and even more on China has sparked debates among economists, trade experts and consumers. These proposed tariffs, which Trump says will help address illegal immigration and drug trafficking, could lead to higher costs for American households – particularly on essential items like groceries, housing and cars. 

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How Tariffs Could Impact Your Wallet

Economic analyst Catherine Rampell, speaking to CNN, warned that the tariffs could raise prices on a wide range of consumer goods. "Two-thirds of the tomatoes that Americans purchase are from Mexico," Rampell said. "90% of the avocados that they purchase are from Mexico, just to mention two examples. So, that guac is definitely going to cost extra."

Tariffs on Canada may also impact the cost of housing, including building, buying new and remodeling. Canada exports much of the lumber and cement used in U.S. construction. 

Car prices may also go up. Tariffs on automotive parts could disrupt North American supply chains, which rely on materials and components crossing borders multiple times during production. 

Rampell mentioned that consumers won't be the only ones who feel the pinch of these changes. Canada and Mexico may retaliate with tariffs of their own, which Rampell says will be "very bad" for consumers and the U.S. workers that "Trump allegedly wants to help."

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Canada's Concerns

Canada's Prime Minister Justin Trudeau recently met with Trump to address the proposed tariffs on Canada. Trudeau emphasized the significant differences between Canada's border and Mexico's at the meeting. 

Kirsten Hillman, Canada's ambassador to the U.S., told AP News that Canada is working on making significant investments in border security. She also pointed out that 99.8% of the fentanyl seized by U.S. authorities comes from Mexico, not Canada. 

"Also with respect to individuals, illegal individuals crossing illegally, Canada last year was less than one percent, 0.6 percent were of total interceptions from Canada," Hillman said.

Hillman and Trudeau felt that there was an understanding about these border differences, however, Trump has not yet signaled a retreat from his tariff plans. Canada is one of the largest U.S. trading partners, with $2.7 billion worth of goods crossing the border daily. Trump's tariffs could disrupt this trade and hurt the industries that depend on these imports. 

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Mexico and the Supply Chain

Mexico, the U.S.'s largest supplier of agricultural produce and a key player in North American manufacturing, will also be deeply affected. Economists warn that tariffs could undermine decades of trade integration established under agreements like NAFTA and its successor, the USMCA.

According to The Hill, supply chains in industries such as automotive and energy depend on seamless trade across borders. Disrupting these networks with tariffs could lead to inefficiencies, higher production costs and retaliatory tariffs from Mexico. Farmers, in particular, could suffer as export markets for U.S. grains and meat products shrink.

President of Farmers for Free Trade, Bob Hemesath, voiced concerns about potential retaliation. "A renewed trade war will hurt American farmers," he said. "A trade war will mean retaliatory tariffs, lost ag trade markets, a leg up for farm exporters in South America and elsewhere and billions in lost exports."

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A Ripple Effect

Beyond the immediate economic impact, experts warn that the instability caused by the tariffs could harm U.S. credibility in future trade negotiations. Ildefonso Guajardo, Mexico's former secretary of economy, said that breaking trade agreements undermines trust in the U.S. and causes a loss of credibility. 

With rising costs and potential disruptions to supply chains, Trump's tariffs may have far-reaching consequences for the average American budget. As discussions between the U.S., Canada, Mexico and China continue, the true impact of these policies remains uncertain – but for now, experts agree that the costs could outweigh the benefits.

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