"Consumers are likely to pay higher prices": Trump tariffs are here

President Donald Trump's campaign pledge to slash gas and grocery costs for Americans could be upended by his other pledge that went into effect Tuesday: steep tariffs on Mexico and Canada and an increase on tariffs on China. 

Trump put a 25% tariff on all imports from Mexico and Canada, with the exception of Canadian energy and oil products, hit with a 10% tariff. Trump ordered an additional 10% tariff on all Chinese goods, bringing the total to 20%. China and Canada responded with their own tariffs on U.S. goods, and Mexico said it would do the same. 

Americans could very well pick up the tab, according to economists, U.S.-based companies and Trump himself. Tariffs are taxes paid by companies that import goods, and they are often passed along to consumers if the companies don't figure out a way to absorb the costs.

Trump has said he "can't guarantee" tariffs won't raise prices, and has doubled down on that. "WILL THERE BE SOME PAIN?" he posted on social media in early February. "YES, MAYBE (AND MAYBE NOT!) BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID."

Economists expect rising costs on a slew of everyday items that come from America's three largest trading partners: vehicles, gas, fruits and vegetables, beer and tequila, computers, children's toys and household appliances, to name a few. Target CEO Brian Cornell told CNBC prices could rise this week on foods imported from Mexico: strawberries, avocados and bananas. Best Buy told investors that prices are likely to rise on its appliances and other products that come from Mexico and China, Bloomberg reported. 

The Tax Foundation, a nonprofit group that advocates for lower taxes, says the additional costs to American consumers from the tariffs could be more than $830 per household this year. "The tariffs on Canada and Mexico alone would increase taxes by $958 billion between 2025 and 2034," the group estimates. And in the long run, tariffs on Canada and Mexico are expected to slow economic growth and accelerate inflation across North America, according to researchers at the Peterson Institute for International Economics in Washington. 

“Consumers are likely to pay higher prices for some imports,” Christopher Meissner, professor of economics at the University of California at Davis, told Salon. “American companies will likely also have to pay higher prices for crucial inputs from these trade partners which will have negative repercussions on both American job growth and businesses’ bottom lines.” 

Cars and car parts

One of the most acute impacts may be felt in the auto market. Mexico is a major supplier of assembled vehicles and their parts, and the U.S. has substantially increased its import of both in recent years. Canada produces around 3,300 cars a day, more than 90% of which go to American buyers, The New York Times reported. 

The industry is among Mexico’s most valuable: In 2021, the U.S. imported $95.3 billion in cars and parts from there, representing 30.9% of all the automotive equipment the U.S. imported from around the globe that year. "U.S. trade with Mexico is basically all about cars," Torsten Slok, chief economist at Deutsche Bank, wrote in a 2019 presentation. 

Trade analysts have for years warned that if the U.S. were to impose steep tariffs on Mexican imports, auto prices would likely increase. In 2019, Trump threatened a 5% tariff on Mexican auto imports that would eventually increase to 25%. Automakers said they would face little choice but to pass along at least some of those expenses to consumers. 

"The tariffs will be a problem for us and everyone else in the industry," Henio Arcangeli, then the head of American operations at Honda, told CNBC. The year prior, Honda had imported 109,989 of the Fit and HR-V models sold in the U.S. from Mexico.

In November, Stellantis NV — whose 14 car brands include Chrysler, Dodge, Jeep and Ram Trucks — was importing around 40% of the cars that eventually sold to American buyers. General Motors was importing roughly 30% of its cars, while Ford was importing around 25%. 

Gas prices

Canada has been the top source of U.S. oil imports for many years; it supplied more than half of the total U.S. crude imports in 2023. In 2023, 60% of the crude oil the U.S. imported came from Canada, a sharp increase from 33% in 2013. “Crude oil imports from Canada have become increasingly important to U.S. oil refineries, now making up most U.S. imports,” the U.S. Energy Information Administration stated in a 2024 report.  

Trump's tariffs would hike the cost of Canadian crude, TD Bank Group said in its report on the tariffs. “A disproportionate share of the negative tariff impacts on imports from Canada would be through the channel of business supply chains and productivity that would drive higher costs and inflationary pressures at the retail level,” the report said.

That means U.S. drivers would likely pay more at the gas pump, "particularly in the Midwest where refineries turn a lot of Canadian oil into fuels like gasoline and diesel," The Times reported.

Groceries

U.S. grocers rely heavily on imports from Mexico and Canada. Mexico is the largest supplier of fruits and vegetables to the U.S., and Canada leads in exports of grain, livestock and meats, poultry and more, CNN reported.

The U.S. imported $46 billion of agricultural products from Mexico last year, according to U.S. Department of Agriculture data. That includes $8.3 billion worth of food like avocados and strawberries, $5.9 billion in beer and $5 billion in distilled spirits.

With grocery stores operating on thinner profit margins than most industries, and with little room to absorb higher tariff costs, consumers might have to pay more. Prices for avocados, cucumbers and tomatoes might spike within a few weeks of the tariffs taking effect, The Times reported.

Sneakers, furniture, toys

China is the largest furniture exporter in the world, according to data from the Home Furnishings Association, a trade group that lobbies on behalf of home goods retailers. In 2023, $32.4 billion in furniture was imported into the U.S., 29% of which came from China, the group said. 

Nearly all footwear is imported to the U.S., and 37% of that came from China in 2023, according to data from the U.S. International Trade Commission.

Most children's toys sold in the U.S. are made in China. "We know that if tariffs hit, that prices are going to go up and it's going to affect the consumer. And so we're absolutely in panic mode in our industry," Jay Foreman, CEO of the Florida-based company Basic Fun!, told NPR in December. 

"You're going to see a $30 Tonka Mighty Dump Truck become a $45 Tonka Mighty Dump Truck," Foreman said. "The prices on so many things that consumers buy in places like Walmart and Target and on Amazon will spike." 

E.l.f. Beauty, a drugstore makeup brand popular among younger shoppers, makes about 80% of its makeup in and around China. E.l.f. CEO Tarang Amin told CNBC the company could be forced to raise prices if the tariff hikes take effect.

There's more at stake with tariffs than steeper prices, said Meissner, the economics professor. 

“With this policy, the U.S. continues its retreat from being the main proponent of a rules-based international economic order to that of chaos and anarchy,” Meissner told Salon.