Donald Trump announced a month ago new tariffs on imported products from China, Canada, and Mexico, the three main trading partners of the U.S. This Tuesday, March 4, the new rates take effect: an additional 10% on imports from China and 25% on most imports from Canada and Mexico.
The three countries decided to retaliate. China’s Ministry of Finance announced tariffs of 15% on imports of chicken, wheat, corn, and cotton from the U.S., as well as tariffs of 10% on imports of soybeans, pork, beef, seafood, fruits, vegetables, and dairy products from the U.S.
Canada imposed tariffs of 25% on $30 billion in goods but did not specify which products would be affected. Prime Minister Justin Trudeau stated that the tariffs would extend to $125 billion in American goods in 21 days.
Mexico is set to announce its retaliation.
Who loses out?
The new tariff war may encourage some companies to set up factories in the United States, but it could also burden supply chains, adding costs for American consumers and manufacturers.
For American families, the most likely outcome is higher prices across nearly all sectors—in grocery store aisles, car dealerships, electronics stores, and gas pumps.
Fresh products, many of which are imported from Mexico, are one of the first categories where shoppers may notice a price increase. This could happen a few weeks after tariffs on Mexican products take effect. These items, including avocados, tomatoes, and strawberries, have a short shelf life. Supermarkets do not have substantial stock, meaning consumers will quickly find products subject to Trump’s tariffs.
The U.S. also imports a variety of agricultural products from Canada, including meat and grains. Trump’s 25% tariff on most imports from its northern neighbor could raise retail prices for beef if supermarkets pass on the costs to consumers.
The tariffs are also expected to increase the prices that American consumers pay for new cars. This is because automakers ship tens of billions of dollars in finished vehicles, as well as engines, transmissions, and other components, every week across the U.S. borders with Canada and Mexico. Billions more are imported from parts manufacturers in China.
New cars and trucks are already being sold at nearly record prices since the pandemic.
How quickly can prices rise?
It depends on the product. Consumers may see a rapid increase in prices for non-durable goods, including groceries. But it may take longer for prices to rise for durable goods, such as cars, thanks to existing stock.
Source: The New York Times