Trump tariffs in Mexico and Canada raise consumer prices
Canada’s Minister of Energy and Natural Resources Jonathan Wilkinson discusses tariffs, energy exports, the US Canada Energy Union, and the potential impacts of future Canadian elections.
president Donald Trump’s The announcement of tariffs in Mexico and Canada was delayed for at least a month, but if it was finally implemented, it could drive a rise in the prices consumers pay for products affected by tariffs .
Last weekend, Trump announced that a 25% tariff on imported products would be effective on Effective Effective products in Canada and Mexico on February 4th. Canada and Mexico have threatened retaliatory tariffs in response to Trump’s tariff plans.
The president has reached an agreement with Canada and Mexico to delay tariffs at least a month after announcing measures to combat fentanyl smuggling and illegal immigration across the US border.
on the other hand Canada and Mexico tariffs It is pending for the time being, and future potential implementations could potentially lead to American consumers facing higher prices for certain products if they are ultimately enabled.
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President Donald Trump has touted tariffs as a negotiation tool and a source of tax revenue. (Chip Somodevilla / Getty Images / Getty Images)
“If we assume that tariffs in Mexico and Canada will be in effect next month or so, we can see prices will rise on many products,” says Dan Savikas, vice president of policy and government affairs for the Taxpayer Protection Union. He spoke to. work.
“Three Big Areas of Possibilities,” Scott Lincicome, Vice President of General Economics and Trade Policy at the Cato Institute, told Fox Business in an interview with the Fox Business. Consumer pain Food, energy, cars. ”
“In food, we import lots of fresh seasonal produce and beer. We import meat from Mexico and some other things,” he explained. “These are perishable items that cannot be stocked, and in the case of avocados, whether in the US or overseas, there is actually no suitable alternative. For example, about the tariffs that Mexican avocados were given to consumers immediately. – There’s no other place to go.”
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Avocados are one of the Mexican products and you can see price increases when tariffs are in effect. (Getty Images/Camilo Friedman via Getty Images/Bloomberg)
Lincicome explained that Automotive Industry More complex, US, Canada and Mexico suppliers and producers make up the North American automotive supply chain.
“you Customs duties apply In these respects, it effectively ensures significant cost increases for automakers in all three countries. After that, how much of that amount will be given. Lincicom explained. There’s once again some amount that the manufacturer can absorb, between $1,000 and $6,000 on a new car. Of course, there will be less investment, employment and production in the process. ”
“We import so much crude oil From Canada, and that’s a kind of crude oil we don’t actually make in the US, and it’s heavy crude oil. Certain refineries, especially in the Midwest and Western Shan, are designed to process that type of crude oil, and cannot actually process light crude oil that the US makes cheap or easy,” he explained. I did.
Trump’s “external revenue services” are collected from importers rather than from “foreign sources.”
Tariffs on interconnected North American car supply chains could lead to higher prices for new car. (Getty Images/Getty Images via Michael Tercha/Chicago Tribune/Tribune News Service)
Lincicome added that prices are likely to rise for appliances such as washing machines, dishwashers and air conditioners made in three countries.
Other products pointed out by Savickas include tariffs, and include wood and related products, taking into account the amount of Canadian wood imported by the US, and Mexican tomato products, so we see prices rise. I pointed out that it can be done.
Brandon Parsons, an economist at the Graziadio Business School at Pepperdine University, told Fox Business that his research suggested. Consumer Price Index (CPI)the popular inflation gauge could rise by 1.3 percentage points if tariffs are implemented.
given that CPI was 2.9% in Decembercould exceed 4% inflation. This is at a level that doubles the Federal Reserve target. Parsons said that an average household would likely increase costs by about $1,000 if their CPI increased by 1.3%, and these costs could increase relatively quickly.
“Assuming these tariffs pass in a month, we expect grocery prices to rise relatively quickly,” Parsons explained. “Certain products like avocados can probably take a few weeks.
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Tariffs are imposed on Canadian crude oil imports, which could lead to a rise in gas prices. (Sven Hoppe/Picture Alliance via Getty Images/Getty Images)
Regarding energy prices, Parsons said his research showed it. Gas Price As a result of tariffs on Canadian crude oil, even at a low 10% tariff rate, it could rise 70 cents. He added that retaliation between the US and Canada could push it even higher.
“We’ve been working hard to get the better of our customers,” Alex Durante, senior economist at Tax Foundation, told Fox Business: “These tariffs target a wide range of goods, such as agriculture, so businesses have fewer adjustment margins, which ultimately puts consumers on the burden. Higher prices.”
Durante added that the US could be considered an unreliable trading partner in the future given the threat of tariffs on Canada and Mexico. US-Mexico-Canada Contract (USMCA) Trump negotiated during his first term.
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“When the US signs the USMCA, it is a commitment to not impose tariffs in violation of the contract, which means it is a further loss of credibility,” he explained. “So, I think not only will our economy deteriorate due to tariffs, but it will make it even more difficult for the US to negotiate future free trade agreements.”