25% Tariff on Canada and Mexico - How will Trump's taxes affect commodity prices?
US President Donald Trump intends to impose a blanket 25% tariff on Mexican and Canadian goods, saying those taxes would start on February 1.
The tariffs, if enacted, could empty Americans' wallets, especially considering that Mexico and Canada are two of America's top three trading partners. Together, they accounted for 30% of the value of all goods the U.S. imported last year, according to federal trade data.
Cars and their parts
The U.S. imported $87 billion in motor vehicles and $64 billion in auto parts from Mexico last year, excluding December, the two top goods imported from there that year, according to Commerce Department data.
Vehicles were also the second-largest commodity the U.S. imported from Canada last year through November, for a total of $34 billion.
The auto sector is expected to suffer the biggest blow from potential new tariffs, experts say. American car companies have been able to keep production costs low by hiring lower-wage workers, especially in Mexico, where much of the manufacturing has shifted in recent years.
gas
The United States imported $97 billion worth of oil and gas from Canada last year, the country's top export to the U.S. The United States has become more dependent on Canadian oil since the expansion of the Trans Mountain pipeline, according to data from the U.S. Energy Information Administration. That has helped distribute more oil for refining to much of the West Coast, except the Midwest.
When Trump initially imposed the 25% tariffs in November, the head of oil analysis at GasBuddy estimated that it would significantly increase the cost of gas for Americans located around the Great Lakes, Midwest and Rockies.
Food and alcoholic beverages
Last year, the U.S. imported $46 billion in agricultural products from Mexico, according to data from the U.S. Department of Agriculture. That 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 beer as well as Casa Noble tequila from Mexico, could see its costs rise by 16% under Trump's proposed tariff and would have to raise prices by about 4.5%, analysts explain.
But the largest category of agricultural imports from Mexico last year was fresh fruit, of which the U.S. imported $9 billion, with avocados accounting for $3.1 billion of that total.
All of these products will cost consumers more, especially since grocers and farmers tend to operate on very low profit margins compared to other industries, giving them little room to absorb the costs of higher tariffs and instead pass it on to consumers.
Poll
Sa ju bindin programet ekonomike të partive për zgjedhjet e 11 majit 2025?
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Janë të detajuara dhe të realizueshme
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