President Donald Trump signed an order to put Canada and Mexico quickly announced retaliatory tariffs, while China said it would take 鈥渘ecessary countermeasures.鈥�
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% on all imports from China and 25% on imports from Mexico and Canada. Energy imported from Canada, including oil, natural gas and electricity, would be taxed at a lower 10% rate.
Following are just a few imported goods whose prices may be hit first:
A 鈥榞renade鈥� 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 鈥� 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.
鈥淵ou have engines and car seats and other things that cross the border multiple times before going into a finished vehicle,鈥欌�� said Scott Lincicome, a trade analyst at the libertarian Cato Institute. 鈥淵ou have American parts going to Mexico to be put into vehicles that are then shipped back to the United States.
鈥淵ou throw 25% tariffs into all that, and it鈥檚 just a grenade.鈥欌��
China is also a major supplier of auto parts to the U.S.
In a report Tuesday, S&P Global Mobility reckoned that 鈥渋mporters are likely to pass most, if not all, of this (cost) increase to consumers.鈥欌�� TD Economics notes that average U.S. car prices could rise by around $3,000 鈥� 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.
Higher prices at the pump
Canada is by far America鈥檚 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鈥檚 not much choice. Canada produces the 鈥渢ype of crude oil that American refineries are geared to process,鈥欌�� Lincicome said. 鈥淚t鈥檚 a heavier crude. All the fracking and all the oil and gas we make here in the United States 鈥� or most of it 鈥� is a lighter crude that a lot of American refineries don鈥檛 process, particularly in the Midwest.鈥欌��
Of the tariffs on Canadian oil imports, Lincicome said, 鈥渉ow the heck does that shake out? My guess is that it shakes out just through higher gas prices, particularly in the Midwest.鈥欌�� TD Economics figures that Trump鈥檚 tariffs could push up U.S. gasoline prices by 30 cents to 70 cents a gallon.
Computers, Clothes and Toys
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 鈥渢oys, games and sporting goods鈥� 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.
Trouble in Margaritaville
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% 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鈥檚 president and CEO, said he appreciates the goal of protecting U.S. jobs. But tequila and Canadian whisky 鈥� like Kentucky bourbon -- are designated as distinctive products that can only be made in their country of origin.
鈥淎t 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,鈥� 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 鈥搃ncluding 63% of imported vegetables and 47% of fruits and nuts. Farm imports from Canada came to $40 billion. A 25% tariff could push prices up.
鈥淕rocery stores operate on really tiny margins,鈥欌�� Lincicome said. 鈥淭hey can鈥檛 eat the tariffs ... especially when you talk about things like avocados that basically all of them 鈥� 90% -- come from Mexico. You鈥檙e talking about guacamole tariffs right before the Super Bowl.鈥欌��
U.S. farmers are nervous, too, that Canada and Mexico will retaliate by slapping tariffs on American products such as soybeans and corn. That鈥檚 what happened in the first Trump administration. China and other targets of Trump tariffs hit back by targeting the president鈥檚 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.
鈥淧resident Trump was as good as his word,鈥欌�� said Mark McHargue, a Central City, Nebraska, farmer who grows corn, soybeans, popcorn and raises hogs. 鈥淚t did take the sting out of it. That鈥檚 for sure.鈥欌�� But he would prefer to see the government push to open foreign markets to American farm exports. 鈥淲e would rather get our money from the market,鈥欌�� said McHargue, president of the Nebraska Farm Bureau. 鈥淚t doesn鈥檛 feel great to get a government check.鈥欌��
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Associated Press Writers Josh Boak in Washington, Dee-Ann Durbin in Detroit and Alan Suderman in Richmond, Virginia contributed this story.
Paul Wiseman, The Associated Press
