3 things to know about Trump's tariffs on Canada, Mexico and ChinaExBulletin

Trump's threat to impose tariffs on Mexico and Canada could also harm Americans. Among the products affected could be gasoline and guacamole. Ulises Ruiz/AFP via Getty Images .

switch caption Ulises Ruiz/AFP via Getty Images

President-elect Donald Trump is threatening to impose high tariffs on the United States' major trading partners unless they do more to stop the flow of illegal drugs and immigrants.

In social media posts Monday, Trump pledged to impose a 25% tax on all imports from Mexico and Canada, as well as an additional 10% tax on imports from China , as one of his first orders after taking office.

If he carries out his threat, the impact will also be felt in the United States, from the supermarket to the car dealership.

Here are three things to know about Trump's tariff proposal.

The tariffs could target other countries, but Americans would also feel the impact.

The president-elect's tariffs are aimed at trying to put pressure on Canada and Mexico on border policy as well as hitting China economically.

“It is time for them to pay a very heavy price,” the president-elect wrote in a message published on his Truth Social platform.

But critics say that if the threatened tariffs take effect, it will be American customers and businesses who will end up footing the bill.

To cite just one high-profile example, tariffs would increase the price of avocados less than three weeks before the Super Bowl, one of the busiest guacamole days of the year.

Shoppers would see higher prices across the produce aisle, since Mexico and Canada supply 32% of fresh fruits and 34% of fresh vegetables sold in the United States.

“One of President-elect Trump's signature pledges during the campaign was to curb inflation and reduce prices at the grocery store,” said Lance Jungmeyer, president of the Fresh Produce Association of the Americas, a trade group. importers.

“You would see an immediate spike [in prices] at the grocery store. We would see restaurants modifying their menus in order to be able to reduce the quantity of products on their plates, or increase prices. »

Trump's proposed tariff would also likely lead to higher gasoline prices, particularly in the Midwest, where Canada supplies much of the crude oil used in U.S. refineries.

Mexican President Claudia Sheinbaum speaks during the high-level summit between Mexican and American leaders and businesspeople at the National Palace in Mexico City on October 15, 2024. YURI CORTEZ/AFP via Getty Images/AFP .

. YURI CORTEZ/AFP via Getty Images/AFP American companies could also suffer

American consumers would not be the only ones to feel the impact. Businesses operating across borders would also suffer.

“I don’t think people really understand how integrated the North American supply chain is,” says Scott Lincicome, a trade expert at the libertarian CATO Institute.

A key example is the US auto industry, which grew under the North American Free Trade Agreement and its successor treaty signed by Trump in 2020.

“Today, some automotive parts, like a car seat, may cross international borders five or six times before finally ending up in an automobile made in the United States,” he adds. “This type of smooth trade would be completely undermined by a 25% tariff, harming many American manufacturers and workers.”

But will Trump really follow through? It's still not clear

Under the law, the president has broad authority to impose tariffs. And Trump did impose taxes on many imports during his first term in the White House, usually after lengthy review by the Commerce Department or the U.S. Trade Representative.

But Trump also threatened to impose far higher tariffs than he actually did.

“Donald Trump was willing to tweet tariff threats, usually in the evening, after watching Fox News, and those tweets usually didn't achieve much,” says Lincicome.

The muted reaction in financial markets on Tuesday suggests that many investors are ignoring the likelihood that the threatened tariffs will take effect.

Chinese President Xi Jinping (R) shakes hands with Canadian Prime Minister Justin Trudeau during the G20 summit in Hangzhou, China, September 4, 2016. Lintao Zhang/Getty Images/Getty Images AsiaPac

rock caption Lintao Zhang/Getty Images/Getty Images AsiaPac

Canadian Prime Minister Justin Trudeau said he had already spoken to Trump by phone. Mexican President Claudia Sheinbaum sent a letter to the president-elect. The two foreign leaders called for cooperation and dialogue.

Whether this will lead to a significant drop in the volume of drugs or immigrants crossing the border remains to be seen.

A Chinese government spokesperson warned: “No one will win in a trade war.”

But China may already be winning this first round. The additional 10% tariff on imports from China that Trump threatened Monday is just a fraction of the 60% levy he called for during the campaign.

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