The Donald Trump-led administration’s plan to impose 25% tariffs on all goods from Canada and Mexico could lead to significant price increases on gasoline, groceries, and cars, experts have warned.
The tariffs, scheduled to take effect on 1 February, would impact two of the United States’ largest trading partners.
Experts say the move could raise costs for American consumers, as importers are likely to pass on the additional tax burden. Essential goods such as tomatoes, tequila, and auto parts are among those that could see higher prices.
“The scary thing is the list of products is very, very long,” said Jason Miller, a professor of supply-chain management at Michigan State University.
Defending the policy, a White House spokesperson pointed to Trump’s previous economic strategy. “In his first administration, President Trump instituted an America First economic agenda of tariffs, tax cuts, deregulation, and an unleashing of American energy that resulted in historic job, wage, and investment growth with no inflation,” Kush Desai, a White House spokesperson, told ABC News.
“In his second administration, President Trump will again use tariffs to level the playing field and usher in a new era of growth and prosperity for American industry and workers.”
Tribune Online takes a look at a list of the goods that could see price hikes according to ABC News
1. Gas
Mexico and Canada account for 70% of U.S. crude oil imports, which are a crucial component of the country’s gasoline supply, according to the U.S. Energy Information Administration.
Most of these imports come from Canada, where crude oil is sent to U.S. refineries designed specifically to process it into gasoline.
Timothy Fitzgerald, a professor of business economics at the University of Tennessee, explained that gasoline made from Canadian crude reaches customers in the upper Midwest, as well as some areas along the East and West coasts.
For those drivers, he said, prices could rise between 40 and 70 cents per gallon.
“You could definitely be looking at 50 cent-a-gallon increases in a lot of parts of the country,” Fitzgerald added, noting that the effects would be concentrated in regions that rely on imported crude.
Additionally, a seasonal price hike driven by increased travel during warmer months could further push prices up by another 30 cents per gallon. If the tariffs remain in place, the combined effect could lead to a $1-per-gallon increase by spring.
2. Tomatoes and Avocados
The U.S. imported $38.5 billion worth of agricultural goods from Mexico in 2023, making it the country’s top supplier of such products, according to the U.S. Department of Agriculture. These imports included more than $3 billion in fresh fruits and vegetables.
A significant portion of the fresh produce consumed in the U.S. comes from Mexico.
Roughly 90% of avocados eaten in the U.S. last year originated in Mexico, according to USDA data. Other heavily imported items include tomatoes, cucumbers, bell peppers, jalapeños, limes, and mangos, Miller said.
It would be difficult for the U.S. to replace these imports with domestic production or an alternative supplier, making price increases likely if the tariffs take effect, he added.
“You’d certainly expect to see an impact on prices,” Miller said.
3. Cars and auto parts
The auto industry, which has deeply integrated supply chains across the U.S., Canada, and Mexico, could also be significantly affected by the tariffs, experts said.
Canada and Mexico are the top two trading partners for both finished motor vehicles and auto parts, according to a Cato Institute analysis of data from the U.S. International Trade Commission.
In 2023, nearly $120 billion worth of motor vehicles were imported into the U.S. from Canada and Mexico, accounting for about 47% of all vehicle imports that year. The analysis showed that the two countries also made up nearly the same share of auto parts imports.
“The operations of auto companies on both sides of the border will be hugely affected by these tariffs,” Robert Lawrence, a professor of trade and investment at Harvard University’s Kennedy School of Government, told ABC News.
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