Cars will come to fruition: Goods will be priced under Trump's tariff plans

President-elect of the United States Donald Trump has promised to impose an additional customs duty of 25 percent on imports from Canada and Mexico and 10 percent on Chinese goods as soon as he takes office in January.

Trump, who announced the plans on social media platform Truth Social on Monday, said the measures were taken in response to Canada and Mexico’s failure to prevent undocumented workers and drugs from crossing the US border.

He said the additional tariffs imposed on China were a response to the flow of drugs into the United States, particularly the deadly opioid fentanyl.

These three countries are the United States’ largest trading partners, accounting for 43 percent of more than $1.3 trillion in imports last year, according to the U.S. Census Bureau.

Economists say the tariffs would lead to higher prices for many goods in the United States, especially if the measures lead to an escalation of tit-for-tat trade restrictions wars between countries.

“If we take Trump’s threats at face value, that means we will see prices rise immediately on January 20,” Nick Marro, chief global trade analyst at the Economist Intelligence Unit (EIU), told Al Jazeera.

“U.S. companies will feel this first, but there will be an impact passed on to U.S. consumers.”

As Americans begin to worry about food prices after the rise in prices due to the impact of the Covid-19 epidemic, higher prices may come in markets.

An Associated Press survey of U.S. voters in November found that 9 in 10 voters were “very or somewhat concerned” about food prices.

Here are some of the major products likely to be priced under Trump’s proposals.

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North America’s automotive industry is a highly integrated enterprise as a result of the North American Free Trade Agreement (NAFTA) and its successor, the United States-Mexico-Canada Agreement (USMCA).

Nearly a quarter of all new vehicles sold in the U.S. in 2023 came from Mexico or Canada, according to data analytics firm GlobalData.

In many cases, vehicles cross borders several times before they are finally sold in the United States.

Vehicle exports make up a large portion of Mexico and Canada’s trade with the United States.

According to UN Comtrade data, 130 billion dollars of the 480 billion dollars of goods imported by the USA from Mexico last year consisted of vehicles and vehicle parts.

According to the same data set, Canada’s imports of vehicles and vehicle parts to the USA were worth 56.35 billion dollars and ranked second after energy.

The average price of a new vehicle in the U.S. was just over $48,000 in November, according to Cox Automotive, and analysts say prices could rise as much as 10 percent.

Companies likely to be most severely affected include Stellantis and General Motors, which import 40 percent and 30 percent of all vehicles sold in the United States from Canada and Mexico, respectively.

The companies have popular brands in the United States such as Chevrolet, GMC, Chrysler, Dodge, Jeep and Ram Trucks.

Ford, Volkswagen, Honda, Nissan, Toyota, Mazda and Kia, which have factories in Mexico, will also be affected by this situation.

fruits and vegetables

Mexico is a major source of fresh food in the United States.

Last year, the value of total agricultural imports was $45.4 billion; this was more than imports from any other country.

According to the U.S. Department of Agriculture, nearly half of fruit and nut imports and 63 percent of vegetable imports to the United States came from Mexico.

Popular Mexican produce that is expected to become increasingly expensive includes avocados, tomatoes, bell peppers, raspberries and strawberries.

“Tariffs distort the market and will increase prices throughout the supply chain, causing the consumer to pay more at the checkout,” the Association of Product Distributors, an industry trade group, said in a statement this week.

U.S. consumers may not be the only group facing a higher grocery bill.

According to the USDA, the United States provides 74 percent of Mexico’s agricultural imports, primarily in the form of grains, oilseeds and meat.

If Mexico follows through on its promise of tit-for-tat tariffs, the prices of these goods will also rise.

“U.S. agricultural exports are a big part of the U.S. trade basket, and I think the farm lobby is already expecting there to be some bounce back there,” EIU’s Marro said.

Meat

Last year, Canada supplied the United States with $40.1 billion in agricultural products, primarily meat and vegetable oil.

3 billion dollars of imports consist of beef, 1.1 billion dollars of pork and 2 billion dollars of live animals.

Similar to the automobile industry, the livestock and meat processing industries rely on heavily integrated cross-border supply chains.

Alcohol

The US imported $4.6 billion worth of tequila and mezcal from Mexico in 2023.

Both types of alcohol are popular in cocktails like margaritas, and consumption has increased 160 percent since 2019 as a resurgence among U.S. consumers appears, according to the United States Distilled Spirits Council, a lobby group.

Mexican beer brands such as Corona, Modelo Especial, and Dos Equis are also popular in the United States.

Mexican beer accounts for 83 percent of U.S. beer imports and is worth more than $3 billion, according to Mexican trade data.

According to the Distilled Spirits Council, the United States imported approximately $537 million worth of spirits from Canada last year; This includes whiskey imports worth $200 million. These include brands such as Canadian Club and Crown Royal.

The lobby group said that due to the unique geographical relationship with such alcohols, they “cannot be re-shipped” to the US.

Crude oil

Canada is a major energy source for the United States and will provide 60 percent of all crude oil imports in 2023.

That amounted to four million barrels of crude oil per day worth more than $124 billion, according to Canadian government data.

Most Canadian crude oil is shipped via pipeline to oil refineries in the U.S. Midwest; Here analysts say that fuel prices will increase in case of new tariffs.

Canada also supplies nearly all (99 percent by 2022) of U.S. natural gas imports, according to the U.S. Energy Information Administration.

Although the United States is also an exporter of natural gas, EIA noted that imports from Canada are still important in meeting demand during the winter months.

The most visible impact of high crude oil prices is increased pump prices for drivers.

But making crude oil more expensive will also increase the cost of countless products that use petroleum derivatives, from nylons to fertilizers and pharmaceuticals.

Electronic

Popular US retailers Walmart and Best Buy say they will likely have to raise prices if Trump follows through on his threats against China.

In addition to threatening a retaliatory 10 percent tariff on Chinese fentanyl during his campaign, Trump also said he would impose tariffs of 60 percent or more on what he said were unfair trade practices.

Both companies sell consumer electronics such as video game consoles, computers, televisions and smartphones, most of which are made in China.

Consumer electronics and lithium-iron batteries accounted for nearly 30 percent of U.S. imports from China last year, according to the Atlantic Council.

Tariffs can also trigger supply chain disruptions, potentially leading to delays, shortages and greater costs.

Best Buy CEO Corie Barry told investors on this week’s earnings call that these additional costs will be passed on to consumers.

“There are very few things in the consumption sphere that are not imported,” he said. “These are goods that people need, and high prices don’t help.”