Many of President Donald Trump's proposed tariffs are on hold for now, but if they do go into effect, triggering a trade war between the U.S. and its biggest trading partners, they will raise prices for American consumers.
Trump initially implemented 25% tariffs on Mexican and Canadian imports, along with an additional 10% tax on Chinese goods, bringing the total tariff to 20%, last Tuesday. But he soon backed off, exempting the auto industry for a month from the 25% tax and then expanded that to cover any product covered by the United States–Mexico–Canada Agreement.
The temporary pauses followed leaders from Mexico, Canada, and China all vowing to take retaliatory action.
"They're going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs," Trump said at the White House Monday as the Dow Jones average fell in real time. A day later he reversed course.
Trump said the tariffs are consequences for China, Mexico and Canada not doing enough to prevent the flow of fentanyl, which is fueling the country's deadly opioid epidemic, into the U.S.
Mexico, China, and Canada make counter-moves
Mexican President Claudia Sheinbaum said Tuesday that Mexico had taken "decisive actions" to stop fentanyl from crossing the U.S. southern border during a 30-day pause on tariffs and that there was no "reason, rationale or justification" behind Trump's decision. Sheinbaum said Mexico would announce its retaliation plans on Sunday.
China's response was immediate. It announced 10% to 15% additional tariffs on American agriculture exports and placed new investment restrictions on 25 U.S. firms. A Chinese commerce military spokesperson called Trump's tariffs "blackmail" and said the country has long been committed to addressing the opioid epidemic.
Canadian Prime Minister Justin Trudeau announced Ottawa would launch 25% tariffs on $20.7 billion worth of American exports to Canada, including orange juice, peanut butter, and beer. He also threatened tariffs on the remaining $86.3 billion worth of American exports if Trump does not lift U.S. tariffs on Canada within 21 days.
What items will cost more for American consumers?
Tariffs are likely to disrupt supply chains and increase the cost of transportation which will lead to a rise in price for almost everything, Truist head of U.S. economics Mike Skordeles, previously told USA TODAY.
"Broadly speaking, higher tariffs will increase import costs, forcing companies to choose between absorbing the hit to their margins or passing it on to consumers," Madhav Durbha, a supply chain expert and group vice president of consumer packaged goods and manufacturing at RELEX, said in an email to USA TODAY. "Either way, this creates inflationary pressure and dampens consumer spending, impacting not only individual companies but the broader market."