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CNN
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President Donald Trump said Monday he still intends to move forward with a across-the-board 25% tariff on Mexican and Canadian goods, although he said the levies would come on 1 February rather than his first-day threat, Trump said in an Oval Office signing ceremony.
The tariffs, if passed, could put a strain on Americans’ wallets, especially since Mexico and Canada are two of the United States’ three largest trading partners. Collectively, they accounted for 30% of the value of all goods imported by the United States last year, according to federal trade data.
While Trump says foreign exporters pay the tariffs, U.S. consumers also have to foot part of the bill because retailers are unlikely to fully absorb the additional costs.
Retailers have taken preemptive measures to avoid rising prices, including stockpiling goods and relocating production from countries that could be hit with tariffs. But these measures may only protect consumers for a limited period. Additionally, many goods cannot be stored or produced elsewhere.
Here’s where a 25% tariff on Mexican and Canadian goods could hit Americans hardest:
Cars and auto parts
The United States imported $87 billion worth of motor vehicles and $64 billion worth of auto parts from Mexico last year, not including December, the top two goods imported from that country that year, data show of the Ministry of Commerce. (December trade data is not yet available.)
Motor vehicles were also the second largest good imported from Canada by the United States last year through November, totaling $34 billion.
The auto industry is likely “apoplectic” over potential new tariffs, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. U.S. automakers have managed to keep production costs low by hiring low-wage workers, particularly in Mexico, where much of their production has moved in recent years.
But those savings will essentially be wiped out if there is a 25% tariff, she said. Automakers are unlikely to relocate production, given that they have made significant investments in existing factories in both countries and that it is difficult to source all the raw materials needed to build the cars and of their pieces elsewhere.
The United States imported $97 billion worth of oil and gas from Canada last year, that country’s largest export to the United States. The United States has become more dependent on Canadian oil since the expansion of Canada’s Trans Mountain pipeline, according to data from the U.S. Energy Information Administration.
This allowed more oil to be transported for refining to much of the West Coast, in addition to the Midwest.
When Trump initially announced the 25% tariffs in November, Patrick De Haan, head of petroleum analysis at GasBuddy, estimated it would increase the cost of gasoline for Americans by between 25 cents and 75 cents per gallon. It would have a more direct impact on Americans living around the Great Lakes, Midwest and Rockies, he predicted.
Food and alcoholic beverages
Last year, the United States imported $46 billion worth of agricultural products from Mexico, according to data from the U.S. Department of Agriculture. This includes $8.3 billion in fresh vegetables, $5.9 billion in beer and $5 billion in distilled spirits.
Constellation Brands, which imports Modelo and Corona beers as well as Casa Noble tequila from Mexico, could see its costs jump 16% under Trump’s proposed tariff and would likely raise prices by about 4.5%, Chris Carey, an equity analyst at Wells Fargo, said in a November note.
But the largest category of agricultural imports from Mexico last year was fresh fruit, of which the United States imported $9 billion worth, with avocados accounting for $3.1 billion of that. total.
These products are now all likely to cost consumers more, especially since grocers and farmers tend to operate at a very low profit margin compared to other sectors, leaving them with little room to absorb the costs of higher tariffs and will pass them on to consumers, Lovely said.
