Excessive heat watch in effect through Sunday

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

President Donald Trump signed an order to put 

tariffs on U.S. neighbors Canada and Mexico, as well as China, starting Tuesday.

 Canada and Mexico quickly announced retaliatory tariffs, while China said it would take “necessary countermeasures.”

The business between the North American nations now exceeds China, totaling $1.8 trillion in 2023. That is far greater than the $643 billion in commerce that the U.S. did with China in that same year.

Trump declared an economic emergency Saturday in order to place duties of 10 percent on all imports from China and 25 percent on imports from Mexico and Canada. Energy imported from Canada, including oil, natural gas and electricity, would be taxed at a lower 10 percent rate.

Following are just a few imported goods whose prices may be hit first:

A ‘grenade’ lobbed into auto production

For decades, auto companies have built supply chains that cross the borders of the United States, Mexico and Canada. More than one in five of the cars and light trucks sold in the United States were built in Canada or Mexico, according to S&P Global Mobility. In 2023, the United States imported $69 billion worth of cars and light trucks from Mexico – more than any other country -- and $37 billion from Canada. Another $78 billion in auto parts came from Mexico and $20 billion from Canada. The engines in Ford F-series pickups and the iconic Mustang sports coupe, for instance, come from Canada.

“You have engines and car seats and other things that cross the border multiple times before going into a finished vehicle,’’ said Scott Lincicome, a trade analyst at the libertarian Cato Institute. “You have American parts going to Mexico to be put into vehicles that are then shipped back to the United States.

“You throw 25 percent tariffs into all that, and it’s just a grenade.’’

China is also a major supplier of auto parts to the U.S.

In a report Tuesday, S&P Global Mobility reckoned that “importers are likely to pass most, if not all, of this (cost) increase to consumers.’’ TD Economics notes that average U.S. car prices could rise by around $3,000 – this at a time when the average new car already goes for $50,000 and the average used car for $26,000, according to Kelley Blue Book.

Canada is by far America’s biggest foreign supplier of crude oil. From January through November last year, Canada shipped the U.S. $90 billion worth of crude, well ahead of No. 2 Mexico at $11 billion.

For many U.S. refineries, there’s not much choice. Canada produces the “type of crude oil that American refineries are geared to process,’’ Lincicome said. “It’s a heavier crude. All the fracking and all the oil and gas we make here in the United States – or most of it – is a lighter crude that a lot of American refineries don’t process, particularly in the Midwest.’’

Of the tariffs on Canadian oil imports, Lincicome said, “how the heck does that shake out? My guess is that it shakes out just through higher gas prices, particularly in the Midwest.’’ TD Economics figures that Trump’s tariffs could push up U.S. gasoline prices by 30 cents to 70 cents a gallon.

Tariffs on China could impact a wide variety of consumer goods that Americans depend on. Cell phones, computers and other electronic devices were among the top imports from China last year, according to Commerce Department data.

The U.S. also imported more than $32 billion in “toys, games and sporting goods” from China last year, data shows.

And Americans import billions of dollars a year in clothing from China. That includes more than $7.9 billion in footwear last year, according to Commerce Department data.

Tariffs could raise the price for those raising a glass of tequila or Canadian whisky.

In 2023, the U.S. imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico, according to the Distilled Spirits Council of the United States, a trade group. The U.S. imported $537 million worth of Canadian spirits, including $202.5 million worth of whisky.

Canada and Mexico were also the second- and third-largest importers of U.S. spirits in 2023, behind the European Union, the council said.

The council said the U.S. is already facing a potentially devastating 50 percent tariff on American whiskey by the European Union, which is set to begin in March. Imposing tariffs on Mexico and Canada could pile even more retaliatory action on the industry.

Chris Swonger, the council’s president and CEO, said he appreciates the goal of protecting U.S. jobs. But tequila and Canadian whisky – like Kentucky bourbon -- are designated as distinctive products that can only be made in their country of origin.

“At the end of the day, tariffs on spirits products from our neighbors to the north and south are going to hurt U.S. consumers and lead to job losses across the U.S. hospitality industry, just as these businesses continue their long recovery from the pandemic,” Swonger said.

Expensive avocados, just in time for the Super Bowl

For American consumers still exasperated by high grocery prices, a trade war with Canada, Mexico and China could be painful. In 2023, the U.S. bought more than $45 billion in agricultural products from Mexico –including 63 percent of imported vegetables and 47 percent of fruits and nuts. Farm imports from Canada came to $40 billion. A 25 percent tariff could push prices up.

“Grocery stores operate on really tiny margins,’’ Lincicome said. “They can’t eat the tariffs ... especially when you talk about things like avocados that basically all of them — 90 percent — come from Mexico. You’re talking about guacamole tariffs right before the Super Bowl.’’

U.S. farmers are nervous, too, that Canada and Mexico will retaliate by slapping tariffs on American products such as soybeans and corn. That’s what happened in the first Trump administration. China and other targets of Trump tariffs hit back by targeting the president’s supporters in rural America. Exports of soybeans and other farm products dropped, so Trump spent billions of U.S. taxpayer money to reimburse farmers for lost sales.

“President Trump was as good as his word,’’ said Mark McHargue, a Central City, Nebraska, farmer who grows corn, soybeans, popcorn and raises hogs. “It did take the sting out of it. That’s for sure.’’ But he would prefer to see the government push to open foreign markets to American farm exports. “We would rather get our money from the market,’’ said McHargue, president of the Nebraska Farm Bureau. “It doesn’t feel great to get a government check.’’

Business and Economic News

Politics and Government News

Homepage

International

The Associated Press

Author

President Donald Trump declared an economic emergency Saturday in order to place duties of 10 percent on all imports from China and 25 percent on imports from Mexico and Canada. 

Here are some goods in the crosshairs of Trump's tariffs on Mexico, Canada and China

Go Deeper.

Like this?