Trump's tariffs could impact imports from Mexico, Canada and China

President-elect Donald Trump has announced a plan to impose tariffs on all products imported from the Americas' three largest trading partners: Mexico, Canada and China. The move could impact prices for a range of imported products, from cars to electronics, experts say.

Trump said Monday night on Truth Social that he intends to sign an executive order on January 20, 2025, to impose a 25% tariff on all products entering the United States on Mexico and Canada, and a tariff 10% customs duty on goods from China. He said the tariffs would be a response to migrants and drugs, like fentanyl, crossing U.S. borders. Trump initially promised during his campaign to impose tariffs of 10 to 20 percent on all imports, and up to 60 percent on products from China. Economists fear his proposed tariff could raise prices for some imported goods and lead to inflation.

It's a time when American consumers expressed a lot of dissatisfaction with inflation and arguably elected Trump because of that dissatisfaction, says Kimberly Clausing, a former senior economist in the Biden administration's Office of Tax Policy. [Trumps proposed tariffs] will be quite expensive for American consumers. It will also be very costly to U.S. manufacturers and U.S. job creation because the North American manufacturing sector is highly integrated across these borders.

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Higher prices for imported goods could also prompt domestic producers to raise the prices of their products, according to Alan Deardorff, professor emeritus of economics and public policy at the University of Michigan. Deardorff says the tariffs could lead companies to move production out of affected countries.

Trump has not disclosed further details about his plan, so economists say it is unclear which products, if any, will be exempt from the tariffs. Here are the top U.S. imports from Mexico, Canada and China that could be affected by the proposed tariffs.

Mexico

Mexico is the United States' largest trading partner, according to September U.S. Census Bureau data. The main products exported by Mexico are cars and their parts, as well as electrical machines and appliances, such as washing machines, according to data from the Atlas of Economic Complexity. Trump's proposed tariffs could make those cars and appliances made in Mexico, or cars and appliances assembled in the United States but whose parts are imported from Mexico, more expensive, economists predict.

[Mexico makes] Many parts are associated with our manufacturing output, so when you buy a product, it could be something simple like a toaster or an appliance, part of which will be a little more expensive because of these tariffs, Clausing explains . There will therefore be a very direct impact on certain products, and an indirect impact on many other products, which will raise the price level in the American economy.

The United States also buys foods like meat and fish from Mexico, according to Sharyn OHalloran, a political economy professor at Columbia University, and Trump's tariffs could also drive up those prices.

Canada

The second largest partner of the Americas is Canada. The United States is the top destination for Canadian exports, the majority of which are crude oil, petroleum gas, lumber as well as automobiles and auto parts, according to data from the Complexity Atlas economic.

If Trump follows through on his tariff plan, the price of lumber imported from Canada could increase, which could lead to higher construction costs in the United States, OHalloran says. The tariffs could also increase the cost of home heating oil, as well as gas prices in the United States, according to Clausing.

China

China ranks as the third largest trading partner of the United States. The United States is the top destination for Chinese exports, which mainly include electronic products such as phones, televisions and computers, according to data from the Atlas of Economic Complexity. Trump's tariffs could increase the cost of electronic products like phones and televisions sold in the United States but made in China.

Under the previous Trump administration, U.S. trade officials created some exceptions to tariffs imposed on China, including removing tariffs on some Apple products assembled in China.

It's unclear whether Trump will create exceptions again or implement his tariff plan. But economists fear that if it did so, countries could retaliate.

Mexican President Claudia Sheinbaum responded to Trump's announcement by suggesting that Mexico would retaliate with its own tariffs against the United States. Canadian Prime Minister Justin Trudeau spoke to Trump about the proposed tariffs, later saying they had a “good” phone call to discuss the situation. Many Canadian officials have criticized Trump's proposed tariffs, and Ontario Premier Doug Ford said Canada would have to retaliate if Trump followed through on his plan.

It would be very bad for the North American economy if this scenario played out as promised. We can hope this is just an elaborate bluff, Clausing says. The problem with this hope is that Trump built his entire campaign around high tariffs. I find it hard to believe that this was all a bluff.

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