What will cost Americans more from sweeping tariffs on Mexico, China and Canada
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American consumers and businesses stand to pay a hefty price for the tariffs President Donald Trump enacted on the nation’s top three trading partners.
With only a slim exemption for some Canadian energy products, everything the US imports from those three nations is subject to tariffs of at least 20%, in the case of China, and 25% for Mexico and Canada.
Americans won’t necessarily feel the full effects of tariffs immediately but the import taxes could raise prices of just about everything, especially given that over 40% of the goods America imported last year came from the nations Trump targeted.
Just how high prices will get – and when – all depend on the extent to which businesses will absorb the higher cost of tariffs or reconfigure their supply chains to minimize costs, as well as how much inventory they have on hand.
Here’s where Americans could feel the sting hardest:
Mexico and Canada supply a significant share of several key food categories. For example, Mexico is the largest supplier of fruit and vegetables to the United States, while Canada leads in exports of grain, livestock and meats, poultry and more.
Agricultural products from Mexico and Canada, in particular, could become more expensive for consumers, as grocery retailers operate on thinner profit margins than most industries. With little room to absorb higher tariff costs, the grocers may have to pass them on to shoppers.
Target CEO Brian Cornell said in an interview with CNBC on Tuesday that Trump’s tariffs on Mexico may force the company to raise prices on fruits and vegetables as soon as this week. Cornell said Target relies heavily on Mexican produce imports during the winter.
“Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he said.
Although the US typically exports more agricultural goods than it imports, the value of imports has increased faster than that of exports in the past decade, according to the US Department of Agriculture. Additionally, climate change has increased US reliance on countries like Mexico, where growing conditions are more favorable.
Last year, the US imported $46 billion of agricultural products from Mexico, according to USDA data. That includes $8.3 billion worth of fresh vegetables, $5.9 billion of beer and $5 billion of distilled spirits.
But the biggest category of agricultural imports from Mexico last year was fresh fruits, of which the US imported $9 billion worth, with avocados accounting for $3.1 billion of that total.
And on top of the tariffs on Mexico, Canada and China, Trump also on Monday floated a separate tariff on agricultural imports, which could further increase the price of foods coming from these countries and worldwide.
Consumer electronics are among the top goods the US imported from China last year, according to federal trade data. That includes cellphones, TVs, laptops, video game consoles, monitors and all the components that power them.
China also is a major supplier of home appliances. Those along with toys and footwear are particularly exposed to Trump’s tariff threats.
A staggering 99% of shoes sold in the United States are imported, according to the Footwear Distributors & Retailers of America, a trade group that represents Nike, Steve Madden, Cole Haan and other footwear brands.
More than half (56%) of shoes sold in the United States are made in China, the trade group said.
The United States is also reliant on China for toys and sporting equipment, including items such as footballs, soccer balls and baseballs. The United States gets 75% of its imported toys and sports equipment from China.
Cars sold in America are no longer purely American-made. In many cases, parts cross between the Mexican and Canadian borders several times before a car is completed –– either in the US or a neighboring country. Automakers built plants across North America in what had been a free trade zone.
“There’s probably not a vehicle on the market today that wouldn’t be affected in some form or fashion by tariffs,” Peter Nagle, automotive economist for S&P Global Mobility, told CNN. “I would think prices would start to change in the one-to-two weeks after the tariffs go into effect.”
The cost of producing cars throughout North America will rise between $3,500 and $12,000, according to analysis of both public and private data by the Anderson Economic Group, a Michigan-based think tank. And because it won’t make sense to make some of the models at those higher costs, particularly cars with cheaper option packages, there are likely to be cutbacks in production, and jobs, across the industry, said Patrick Anderson, the group’s CEO.
“Producers will stop making some of the models,” Anderson predicted. And he said the suggestion by Trump that automakers will quickly shift production back to the United States in response isn’t at all realistic. That’s an expensive proposition that could take years to achieve.
CNN’s Alicia Wallace and Chris Isidore contributed reporting.
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Trump Tariffs Update: Mexico, Canada, China Shots Fired; Here’s The Impact As S&P 500 Slides
SPOTLIGHT: Trump Tariffs: Mexico, Canada, China Shots Fired
Trump tariffs of 25% on imports from Mexico and Canada took effect at midnight, with the exception of a 10% tariff on Canadian energy goods. President Trump also signed an order doubling his recent 10% tariff on all Chinese imports to 20%. China and Canada have already struck back, and Mexico is expected to also. The S&P 500 dived 1.7% on Monday to a seven-week low, as companies in the line of fire such as Dell Technologies (DELL) and General Motors (GM) faced heavy selling. Apple (AAPL), which faces iPhone tariffs, is holding steady.
The Trump administration has justified the tariffs based on a national security emergency to stem the flow of drugs and migrants, but tariffs are an integral part of Trump’s economic agenda to boost domestic production. The tariffs will raise prices, pinching consumer demand and hurting U.S. exporters as trading partners retaliate. However, the hit to economic growth will be offset to some extent by lower interest rates as financial markets price in a greater likelihood of near-term Fed rate cuts.
Trump confirmed on Monday afternoon that Mexico and Canada tariffs would take effect as scheduled, dashing Wall Street hopes that the initial tariff rate would be lower than 25% and triggering a late-day sell-off for the S&P 500.
The 20% across-the-board tariff on Chinese imports put into place over the past month comes on top of 25% tariffs applied on more than $300 billion worth of Chinese goods in 2018 and 2019. Unlike during his first term, Trump tariffs now apply broadly to consumer electronics imports from China, including the Apple iPhone.
Canadian Prime Minister Justin Trudeau announced that Canada will retaliate with an initial 25% tariff on about $20 billion worth of imports from the U.S., including bourbon, Florida orange juice and home appliances, all produced in Republican-run states. That will escalate with tariffs on nearly $90 billion worth of goods.
China announced retaliatory tariffs of 10% to 15% on U.S. agricultural goods including, chicken, soybeans and cotton.
Deutsche Bank economists estimate that the tariffs on Mexico and Canada alone would raise the Fed’s primary inflation rate, the core PCE price index, by four-tenths to seven-tenths of a percentage point, while cutting GDP growth by 0.3 to 0.7 percentage point.
Mexico and Canada together accounted for $918.5 billion in U.S. goods imports in 2024, or about 28% of the total. The integration of North American economies under NAFTA and then the renegotiated U.S.-Mexico-Canada Agreement under President Trump means that some goods cross the border more than once, before and after finished assembly.
Commerce Department data shows that the U.S. imported $439 billion worth of goods from China last year.
Tax Policy Center estimates of the tariffs on Mexico and Canada and a 10% increase on China show an average $1,030 hit per household.
However, easier monetary policy in reaction to the tariffs could soften the impact. As of Tuesday morning, markets now see 40% odds of a rate cut by the May 7 Fed meeting, up from 25% a week ago. Markets now see 66% odds that the Fed will cut its key rate by 75 basis points this year.
Bernstein analysts estimated that the 25% tariffs on Canada, Mexico and China could add $2,700 per vehicle, creating a $43 billion headwind for the industry. Of the Big Three, Bernstein said GM would feel the biggest hit, amounting to a 64% decrease in automotive free cash flow.
S&P Global estimates that 90% of Apple iPhones are manufactured in China, as well as a high percentage of the company’s laptops. Dell and HP (HPE) have diversified manufacturing away from China but still have a significant presence, S&P Global analysts says, while “a sizeable portion of Dell servers are manufactured in Mexico.”
Cisco Systems (CSCO) has expanded its supply chain exposure to Mexico to just over half of revenue, S&P Global estimates.
Bank of America analysts wrote last month that Apple would likely face “at least a 10% tariff,” which would require a 9% price increase to overcome. That assumed that production in India would also face at least a 10% tariff, given Trump’s plan for reciprocal tariffs. That calculation doesn’t take into account the latest doubling of across-the-board tariffs on Chinese imports to 20%. Apple iPhones avoided tariffs in Trump’s first term but are in the line of fire this time around.
Tariffs will bring an upfront hit to demand and to exports, while the payoff of a domestic manufacturing expansion will take time to come to fruition. However, announcement of plans to expand in the U.S. have come quickly.
On Monday, Taiwan Semiconductor (TSM) said it will plow an additional $100 billion into its U.S. manufacturing buildout.
Apple has said it is stepping up investments in the U.S. to $500 billion, though it announced a $430 billion investment over five years in 2021.
Honda (HMC) said it will build its next hybrid Civic in the U.S. in response to tariffs, following Nissan’s (NSANY) recent announcement that it may have to move production of cars for the U.S. market out of Mexico.
Eli Lilly (LLY) said it will invest $27 billion in new U.S. plants.
Tariffs of 25% on all steel and aluminum imports, roughly $50 billion worth, will take effect March 12.
Trump signed an executive order to impose a reciprocal level of tariffs that other countries impose on the U.S. However, he also said the reciprocal rate should take into account non-tariff trade barriers, such as government subsidies, value-added taxes and currency valuations. Tariff rates could be set by early April.
Trump has said he plans to impose tariffs of 25% on imports of autos, semiconductors and pharmaceuticals as soon as April 2.
Agricultural imports could also face tariffs in early April, Trump posted on Monday.
S&P 500 futures fell 0.6% in early Tuesday stock market action. That follows Monday’s 1.7% S&P 500 sell-off, which left the index 4.8% below its Feb. 19 closing high.
Through Monday, the S&P 500 remained 1.2% above its Election Day close.
The Nasdaq composite closed below its Election Day low on Monday, closing below its 200-day line for the first time since October 2023.
Be sure to read IBD’s The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
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Trump tariffs live updates: Mexico president says retaliatory tariffs coming Sunday
President Donald Trump went forward with sweeping tariffs at midnight on goods imported from Canada and Mexico, while doubling down on punitive duties on China.
The latest:
U.S. tariffs against Canada and Mexico taking effect Tuesday are not part of a trade war but rather an effort to stop the flow of fentanyl across the respective borders, Commerce Secretary Howard Lutnick said.
“The current tariff policy is a drug related policy. There’s opioids pouring into this country. They’re killing about 75,000 autopsied Americans a year,” Lutnick said during an interview on CNBC’s “Squawk Box.” “China makes the opioid products, and then Mexico and Canada feed them into America, and that’s got to end. They’ve done a nice job on the border, but they haven’t stopped the flow of fentanyl.”
Though President Donald Trump has taken a stern hand when it comes to the duties, Lutnick offered some hope that they can be lifted if more progress is shown.
“If they can stop the flow of fentanyl, and they can prove to the president they can stop the flow of fentanyl, then of course the president can remove these tariffs,” he said.
Lutnick differentiated the 25% tariffs on Canada and Mexico from those that will take effect on April 2, which he said would mark a “reset” of trade policy specifically relating to the flow of goods and services. Also, he noted that “there may well be short-term price movements” that will hit consumers “but in the long term it’s going to be completely different.”
—Jeff Cox
Oil prices fell Tuesday morning as President Donald Trump’s tariffs on Canada and Mexico coincide with higher supplies from OPEC+, souring the outlook for crude.
U.S. crude
oil was down 70 cents, or 1.02%, at $67.67 per barrel by 9:20 a.m. ET, while global benchmark Brent
traded $1.02, or 1.42%, lower at $70.60 per barrel.
Trump’s tariffs include 10% duties on energy imports from Canada. Many U.S. refiners, particularly in the Midwest, are dependent on heavy crude imports from Canada.
While the levies on energy imports will likely disrupt crude flows in North America, broader 25% tariffs on the two largest trading partners of the U.S. could slow economic growth and depress oil demand.
Shares of refiners Marathon Petroleum
, Phillips 66
and Valero
all fell in premarket trading.
Meanwhile, OPEC+ affirmed on Monday that it will gradually return 2.2 million barrels per day to the market starting in April, casting a further shadow over the supply-and-demand balance.
— Spencer Kimball
U.S. President Donald Trump’s 25% tariffs on goods from Mexico could lead to higher produce prices as early as this week, according to Target’s
Brian Cornell.
The company’s CEO said on Tuesday that Target relies on Mexico during the winter season for a “significant” amount of supply for some categories like fruits and vegetables, meaning that the levies could prompt the company to soon raise prices on those goods.
“Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he said on CNBC’s “Squawk Box” on the heels of Target’s latest quarterly results.
Cornell added that strawberries, avocados and bananas were some of the key produce that could see price increases.
“We’re going to try and make sure we can do everything we can to protect pricing, but if there’s a 25% tariff, those prices will go up,” he also said.
— Sean Conlon, Jacob Pramuk, Gabrielle Fonrouge
Mexican President Claudia Sheinbaum is now speaking about the U.S. tariffs, saying that there is no justification for the new levies on imports from her country.
Sheinbaum said she will announce retaliatory tariffs this weekend.
“We have decided to respond with tariff and non-tariff measures that I will announce on Sunday,” Sheinbaum said.
— Jesse Pound, Fred Imbert
Legendary investor Warren Buffett made a rare comment over the weekend on Trump’s tariffs, warning their negative effects on the consumer.
“Tariffs are actually, we’ve had a lot of experience with them. They’re an act of war, to some degree,” said Buffett, whose conglomerate Berkshire Hathaway has large businesses in insurance, railroads, manufacturing, energy and retail.
“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” the 94-year-old Buffett said with a laugh. “And then what? You always have to ask that question in economics. You always say, ‘And then what?’”
— Yun Li
Canadian Prime Minister Justin Trudeau on Monday said retaliatory tariffs on U.S. goods will start Tuesday, if U.S. President Donald Trump follows through with his proposed levies.
Canada will impose tariffs of 25% on C$155 billion ($107 billion) on U.S. goods, with C$30 billion ($20.8 billion) worth of U.S. goods to go into effect on Tuesday, according to a statement. Levies on the remaining C$125 billion ($86.7 billion) will start in 21 days.
“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau said.
— Sarah Min
While Canada and China have already announced retaliatory tariffs, Mexico has not made a similar proclamation as of Tuesday morning.
Trump and Mexican President Claudia Sheinbaum had previously worked together on border security, but the U.S. president said Monday there was no room left for negotiations.
Target CEO Brian Cornell said Tuesday that the tariffs on Mexico could lead to an increase in produce prices in the coming days.
— Jesse Pound
President Donald Trump confirmed Monday that the U.S. will impose reciprocal tariffs on April 2 against countries that his administration deems are using unfair trade practices.
“Reciprocal tariffs start on April 2,” Trump told reporters at a press conference that was held to announce a $100 billion investment from Taiwan Semiconductor.
The goal of Trump’s policy is reduce the U.S. trade deficit, which he has described as a national security threat in a presidential memorandum signed on Feb. 13.
The European Union is likely to be in the crosshairs when Trump’s reciprocal tariffs take effect. The president has repeatedly criticized the value-added tax on goods and services used in European countries, claiming it puts U.S. companies at a disadvantage.
Trump’s presidential memorandum on reciprocal tariffs specifically calls out the VAT.
Trump threatened during a cabinet meeting last Wednesday to impose 25% tariffs on the EU, claiming the bloc was formed to “screw the United States.”
Total U.S. goods trade with the EU was $975 billion 2024, according to the Office of the U.S. Trade Representative. The U.S. had a goods trade deficit of $235.6 billion with the EU.
— Spencer Kimball
China has moved quickly to strike back against Trump’s latest tariff plans.
The Chinese governments on Tuesday announced retaliatory tariffs on some U.S. goods of up to 15%, starting on March 10, as well as new export controls.
The new tariffs from China are targeted at the U.S. agricultural sector. U.S. corn will face a 15% levy, while soybeans will be hit with a 10% tariff, according to the finance ministry’s website.
The moves come as an additional 10% tariff from the U.S. on Chinese good is set to take effect Tuesday.
China’s relationship with the U.S. is bound to see disagreements, but China will not accept pressuring or threatening, Lou Qinjian, spokesperson for the third session of the 14th National People’s Congress, told reporters Tuesday morning.
— Jesse Pound, Evelyn Cheng
The stock market has struggled as investors contend with the expected impacts of President Donald Trump’s tariffs on the economy.
The S&P 500
notched its worst day of 2025 on Monday, with losses steepening in the session after Trump made clear that his planned levies would go into effect. With that decline, the broad index is now in the red on the year.
Stocks with notable connections to countries slapped with tariffs have felt the heat. Ford
and General Motors
are both down in Tuesday’s premarket, extending losses seen this year. Chipotle
, which sources about half of its avocados from Mexico, also pulled back before the bell and is down nearly 10% in 2025.
— Alex Harring
Trump dashed hopes for a last-minute deal that could avoid a trade war with 25% tariffs on goods imported from Canada and Mexico going into place at midnight.
Trump told reporters Monday afternoon there was “no room left for Mexico or for Canada” to negotiate an alternative to the tariffs, which he has threatened to impose for weeks.
Trump on Monday also imposed an additional 10% tariff on Chinese imports, doubling the 10% duty he had slapped on Beijing in early February.
— Yun Li, Kevin Breuninger
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