Tariffs that President Donald Trump plans to slap on imports from Canada and Mexico as soon as this weekend could drive up the price of everything from gasoline and pickup trucks, to Super Bowl party guacamole dip.
Trump’s tariffs threaten to blow up the trade agreement he himself negotiated with America’s neighbors in his first term. His U.S.-Mexico-Canada Agreement – “the fairest, most balanced, and beneficial trade agreement we have ever signed into law,’’ Trump once declared -- was supposed to bring predictability to North American trade, giving businesses the confidence to make investments.
Here are just a few of the imported goods that could be hit first.
A “GRENADE’’ LOBBED INTO AUTO PRODUCTION
For decades, auto companies have built supply chains that cross the borders of the United States, Mexico and Canada. More than one in five of the cars and light trucks sold in the United States were built in Canada or Mexico, according to S&P Global Mobility. In 2023, the United States imported $69 billion worth of cars and light trucks from Mexico – more than any other country -- and $37 billion from Canada. Another $78 billion in auto parts came from Mexico and $20 billion from Canada. The engines in Ford F-series pickups and the iconic Mustang sports coupe, for instance, come from Canada.
“You have engines and car seats and other things that cross the border multiple times before going into a finished vehicle,’’ said Cato’s Lincicome. “You have American parts going to Mexico to be put into vehicles that are then shipped back to the United States.
“You throw 25% tariffs into all that, and it’s just a grenade.’’
In a report Tuesday, S&P Global Mobility reckoned that “importers are likely to pass most, if not all, of this (cost) increase to consumers.’’ TD Economics notes that average U.S. car prices could rise by around $3,000 – this at a time when the average new car already goes for $50,000 and the average used car for $26,000, according to Kelley Blue Book.
HIGHER PRICES AT THE PUMP
Canada is by far America’s biggest foreign supplier of crude oil. From January through November last year, Canada shipped the U.S. $90 billion worth of crude, well ahead of No. 2 Mexico at $11 billion.
For many U.S. refineries, there’s not much choice. Canada produces the “type of crude oil that American refineries are geared to process,’’ Lincicome said. “It’s a heavier crude. All the fracking and all the oil and gas we make here in the United States – or most of it – is a lighter crude that a lot of American refineries don’t process, particularly in the Midwest.’’