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Folks, the tariffs are really, truly here. And they are steep.
After delaying his initial threat for a month, President Donald Trump implemented 25 percent tariffs on all Mexican and Canadian imports on Tuesday, with a lower 10 percent tier afforded to energy-related imports from Canada. These came alongside even more taxes on China, with another 10 percent universal tariff added to the levies Trump had imposed on Chinese goods just one month ago.
And, in his first address to Congress on Tuesday, the president hinted that tariffs might also be coming for other countries like India, South Korea, and Brazil, in addition to the 25 percent tariffs on all steel and aluminum bound for American shores.
As a result, the stock market has gone completely haywire this week, erasing its postelection booms and plunging the financial sector to some of its worst lows since the 2023 Silicon Valley Bank collapse. The only respites came when Commerce Secretary Howard Lutnick attempted to quell fears by saying Trump may reduce some of the tariffs after further discussions with Canadian and Mexican leaders, keeping in mind the terms of the regional free-trade agreement that Trump also helped to negotiate back in 2018. The president did announce Wednesday that the all-important auto sector will be exempt from the taxes for another month—news that Wall Street very much welcomed.
It’s a mess, not least because this fickle administration is claiming to be “open” to further exemptions, which could change everything on a whim. But what does it all mean for you, the humble consumer caught up in this trade-war whirlwind even though you’ve long tired of inflation and the fact that Trump take egg? We’ll break it all down.
Uh, so, just asking for a friend, but: What’s a tariff? And, why is it happening?
A tariff is a tax on international trade, focused on certain goods that arrive to one country’s border from another. They’ve long been a controversial tool of economic policy, helping to discourage other countries from selling certain products to the United States, in service of helping to grow and develop more homegrown industries and self-sufficiency.
A broad, longtime economic consensus has been to generally discourage tariffs in favor of free trade, to lower barriers and incentivize more international exchanges—subject to various conditions imposed by the most economically powerful nations. (Don’t forget, part of Trump’s initial appeal stemmed from his opposition to the Trans-Pacific Partnership, a planned free-trade agreement with Asia that he saw as bad for American workers.)
Although the auto sector–specific tariffs on Canada and Mexico will be delayed until April, the other U.S.-imposed tariffs relevant here are:
• 25 percent duties on all Canadian imports, with the exception of a 10 percent tax on Canada’s exported “energy resources,” aka oil and gas
• 25 percent tariffs on all Mexican exports, no exceptions
• A sum total of 20 percent across-the-board taxes on Chinese imports
• Already-in-effect 25 percent tariffs on all steel and aluminum imports, no matter the country of origin
It’s a lot, and it’s going to really hurt the job market and economies of some of America’s closest allies (not to mention the U.S. itself). Trump’s insistence stems from his conspiratorial demands for our North American allies to do more to stem illegal immigration and flows of fentanyl into the U.S.—plus, his bizarre desire to annex Canada altogether. Trump also says he wants to reduce trade imbalances by encouraging domestic manufacturing, of course, even though his administration seems to be doing everything it can to obstruct domestic investment.
China, Mexico, and Canada have all levied a variety of responses. Chinese countertariffs, ranging from 10 percent to 15 percent, are targeting the U.S. agricultural sector. Canada is similarly hitting back with tariffs on $21 billion of U.S. goods, with plans to include another $125 billion worth of imports should Trump’s tariffs remain in place three weeks from now. On top of that, Canadians have been retaliating at a local level, with citizens boycotting American companies, provinces refusing to stock American liquors (including brands from red states specifically), and Ontario Premier Doug Ford threatening to shut off exported hydroelectricity to U.S. citizens “with a smile on his face.”
Jeez! So what’s going to get more expensive for me exactly?
The answer is … a lot, potentially. Canada and Mexico are massive agricultural exporters, and we’re their single-biggest trade market in the sector. China, on the other hand, is also known for all those cheap toys, appliances, furniture, clothes, metals, and minerals.
Here are some of the sectors that will be most immediately walloped by this cross-border taxation:
Electricity: American states near the Canadian border will see their electric bills go up, whether Ontario decides to just tax its exported power or cut off the transmission altogether. Utilities won’t be able to rely on oil and gas to make up for power costs, with the levies imported on Canadian fossil fuels.
Fruits and veggies: Target’s CEO told CNBC this week that, as one of many American retailers that relies on imported Mexican produce during the winter months, the store expects to see prices for “strawberries, bananas, and avocados” to rise. Other products that may suffer include bell peppers, blueberries, broccoli, cauliflower, raspberries, and tomatoes. That also extends to processed goods like juices and pickled foods.
Eggs: So, that whole thing about the U.S. trying to import more eggs as bird flu rampages across American livestock centers? Most of our imported eggs hail from Canada. Once again, Trump take egg!!!
Meat and dairy and seafood: Speaking of bird flu, we import a lot of cattle from both Canada and Mexico, and we get a lot of pork from the north. We also get a lot of fresh fish and seafood from both nations, with Canada being our single largest international supplier in that sector.
Beer and spirits: Your favorite beer, whether craft or imported, is about to get pricier. Not only do Americans love Mexican and Canadian brews (Modelo, Michelob, etc.), but all beermakers’ urgently need imported aluminum and steel and are dependent on Canadian grains. Mexican tequila and Canadian whisky will also witness a surge.
Tech accessories: Best Buy, like other consumer-tech stores, sources more than half its products from China. So expect everyday gadgets like smartphones, computers, batteries, gaming hardware, and smartwatches to get pricier. Replace that stuff now if you need to.
Clothes: Textiles from all three countries will all be hit by the tariffs. This includes wool and jackets from Canada, knitted apparel and curtains/bedding from Mexico, and fast fashion and cheap tees from China.
Shoes: More than half of the shoes sold in the U.S. are made in China, which makes the latest tariffs even more dire for the industry, since Mexican-produced sneakers will no longer be a cheaper option. Already, footwear sales have plunged sharply in thousands of stores across the U.S.
Paper products: Timber, pulp, and paper products are exported en masse from Canada to the U.S., simply because it’s a fundamental and scaled-up industry in the north. So expect prices to rise for books, magazines, newspapers, pamphlets, envelopes, wallpaper, paper packaging for food and gifts, lumber for construction, toilet paper, tissue paper, and more.
Toys and recreation: Mattel’s CEO admitted that its China-manufactured Barbie dolls and Hot Wheels cars will see a price bump due to the tariffs. The same applies for many other cheap sources of enjoyment for children and adults: board games, action figures, and even McDonald’s Happy Meal add-ons.
When should we expect all those prices to go up?
Canada and Mexico will feel the shocks most acutely, but the overall effect on Americans will be more gradual. The American states closest to Canada geographically will see some of the most immediate impacts: higher electricity prices as utilities prepare for Ontario’s wrath, higher lobster and seafood prices trickling from Maine on down, and significant upheaval in the craft-beverage and paper-printing sectors. (Come to think of it, maybe start stocking up on toilet paper.)
Agricultural outputs will stay pricey for a while yet, due to the winter season and the hit to the field workforce thanks to Trump’s mass deportations. And no, buying frozen foods won’t help, since several of those are also imported from our continental partners. The effect on consumer tech will take a while yet, since those supply chains cover a longer span and allow tech firms more time to plan ahead.
Also, within a few days to weeks, drivers across the U.S. should expect to see gas prices rise—with some experts predicting a spike of up to 40 cents per gallon.
Should I also be worried about my job?
The workers likely to be hit hardest, first and foremost, are the farmers. Canada and Mexico are two of our most important agricultural customers, and small farmers will suffer immensely if they aren’t able to export their products. They also rely heavily on imported machinery and potash and fertilizer to support their livelihoods.
You should also be worried if you’re in the alcohol industry, as Canada makes for a significant customer for our liquor sales. Retail workers in tech, cultural products, and clothing should also steel themselves for significant input costs, along with any white-collar industry that depends on Chinese tech and Canadian paper products. Craft hobbyists in specialized trades like art, comics, music, and gaming should stock up on supplies now.
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Trump has said he’s drawing inspiration from American tariffs in the late 1800s. How did it go back then?
Ah, yes, Trump’s most beloved ex-president, William McKinley. There are a few things the current president should keep in mind there.
One, on a sheer electoral level, the tariffs McKinley passed in the 1890s as both congressman and president were both economically disastrous for the country, eventually fueling a recession in 1893. (Democrats lowered the McKinley Tariff the following year.) It was also electorally disastrous for his Republican Party, which got beaten quite badly by Democrats in both 1890 and 1892, before making a comeback in the 1896 election that crowned McKinley president. By then, however, he had also softened his approach to tariffs, emphasizing a more cooperative approach with other nations (famously including China) when framing trade policy.
At the time, the United States lacked basic economic stabilizers we now take for granted, like an individual income tax, making for a governmental structure that depended upon import taxes and high sales taxes for any substantive revenue. We were also in the thick of the gold standard at the time, which McKinley enshrined into law in 1900.
Basically, it was a different economic order altogether, but even then, Mr. Tariff President himself came to recognize that import-export taxes should not be an instrument of coercion. (McKinley learned that the hard way with Canada, which reacted to his tariffs in much the same way it’s reacting to Trump’s.)
So the current administration seems to want to emulate an era that saw the country catapulted into an economic recession and spelled disaster for the Republican Party. At the very least, it’s the kind of bold, illogical decision that’s on brand for Trump.