President-elect Donald Trump has announced plans to impose a 25% tariff on all goods imported from Canada and Mexico from Jan. 20, 2025. Nearly 30 percent of all U.S. trade is with both nations. Tariffs on such a broad range of goods would affect the cost of many commonplace items since the United States depends increasingly on imports from its closest neighbors. Here’s what to expect.
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Automobiles and Automotive Parts
"A 25% tariff on Mexico and Canada would severely cripple the U.S. auto industry," C.J. Finn, U.S. automotive sector leader for PwC, told AP.
Canada and Mexico are significant suppliers of vehicles and auto parts for the U.S. market. Many cars sold in the U.S. are either assembled in those countries or use components sourced from them. Per Newsweek, analysts estimate that a 25% tariff could add between $1,000 and $5,000 to the price of a new car.
The impact wouldn't be limited to new vehicles – replacement parts, including engines, transmissions and tires, would also see a price surge as automakers like General Motors, Ford and Stellantis heavily depend on Mexican factories for parts. The increased costs would inevitably trickle down to American consumers.
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Agricultural Products
Fresh produce and agricultural products are also on the tariff hit list. Canada and Mexico are the primary exporters of many food items to the U.S. Everyday staples like avocados, strawberries, tomatoes, beef and cheese will likely become more expensive.
According to the USDA, nearly 90% of the avocados consumed in the U.S. come from Mexico and the proposed tariffs could result in a dramatic price increase for avocado toast lovers and guacamole fans. Canadian beef exports to the U.S. account for around 80% of total exports, meaning higher tariffs will impact the cost of meat, dairy and other staples.
Gas and Mineral Fuels
Canada is the largest exporter of crude oil and refined petroleum to the U.S., providing essential gasoline and heating oil supplies. Patrick De Haan, head of petroleum analysis at GasBuddy, said on X that the proposed tariffs could lead to an increase of 25 to 75 cents per gallon at the pump, particularly affecting regions like the Great Lakes, Midwest and Rockies.
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Electronics
Many electronic devices, such as smartphones, laptops and home appliances, are assembled in Mexico or use components manufactured there. Consumers would find that upgrading their gadgets and household appliances could take a bigger bite out of their budgets, from televisions to refrigerators.
Alcohol
Alcohol imports from Mexico and Canada – including beer, tequila, mezcal and Canadian spirits – are set to become pricier. Mexico accounts for over 80% of U.S. beer imports and tequila has been a major driver of import growth. Reuters cites the Distilled Spirits Council, which has warned that tariffs on these products would “hurt U.S. consumers and lead to job losses across the U.S. hospitality industry,” which is still recovering from the pandemic.
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Plastics, Machinery and Industrial Equipment
Canada and Mexico supply significant amounts of plastic materials used in packaging, construction and other consumer goods. Heavy machinery and industrial equipment – including boilers, engines and other manufacturing tools – would also become more expensive, potentially slowing down construction and manufacturing projects in the U.S.
Aluminum and Steel Products
Canada is a major supplier of aluminum and steel, essential for construction, automotive manufacturing and packaging. Tariffs on these materials would raise costs for industries that rely on metal imports, affecting everything from car manufacturing to beverage cans. Higher costs for these basic materials could translate into increased car prices, home appliances and canned goods.
As commentator Catherine Rampell said on CNN, “If you voted for Trump because you thought he was going to bring down the cost of housing, a lot of our lumber, cement and other materials comes from Canada, which means that construction costs are going to go up.” By imposing tariffs on such a wide range of goods, Trump's proposed measures will be virtually unavoidable for most American consumers.
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