President-elect Donald Trump's proposed tariffs on Canada and Mexico could lead to price hikes for a range of everyday goods.
On Monday, Trump announced his plan to impose a 25 percent tariff on goods from Canada and Mexico. In a series of Truth Social posts, Trump explained that the tariffs were intended to curb the flow of illegal drugs, such as fentanyl, into the U.S. According to the U.S. Drug Enforcement Administration, Mexico is one of the primary sources of fentanyl and related substances entering the U.S.
The president-elect wrote: "As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border. On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25 percent Tariff on ALL products coming into the United States, and its ridiculous Open Borders."
Canada and Mexico are major trading partners with the U.S., accounting for almost 30 percent of U.S. trade volume. Canada is also one of the most trade-dependent countries in the world, with 75 percent of its exports going to the U.S., so higher tariffs would have a significant effect on Canada's economy.
In response to the proposed tariffs, the Canadian government, in a joint statement from Deputy Prime Minister Chrystia Freeland and Public Safety Minister Dominic Leblanc, emphasized the close relationship between the two countries and said they would discuss the border and vast economic ties with the incoming administration.
"Canada places the highest priority on border security and the integrity of our shared border. Our relationship today is balanced and mutually beneficial, particularly for American workers," the statement read. Mexico's Foreign Relations Department and Economy Department had no immediate reaction to Trump's statements.
It remains uncertain whether Trump will follow through on his tariff proposals or whether they are part of a broader negotiating strategy as he prepares to return to office in January.
If the tariffs are imposed, they could cost Americans an estimated $78 billion annually, NBC News reported, with everyday goods costing more.
Below are the seven major product categories that would be most affected.
Automobiles and Automotive Parts
Canada and Mexico are major suppliers of vehicles and parts, and many cars sold in the U.S. are assembled in those countries or use components sourced from them. Analysts have estimated that a tariff could add $1,000 to $5,000 to the price of a new car, with parts such as engines, transmissions and tires becoming more expensive. Replacement parts would also become more expensive because of the tariffs.
Agricultural Products
Canada and Mexico are also significant exporters of agricultural goods to the U.S., including fruits, vegetables, meat and dairy. A 25 percent tariff would make everyday staples such as avocados, tomatoes, beef and cheese more expensive for U.S. consumers.
Canadian beef exports across all markets are projected to total 595,000 tons this year, with about 80 percent destined for U.S. customers. Last year, the U.S. imported $2.7 billion worth of avocados from Mexico, the U.S. Department of Agriculture reported.
Electronics
Many electronics—including smartphones—are assembled in Mexico or rely on components manufactured there. Tariffs on electronics could lead to higher prices for consumer goods, especially devices such as TVs, laptops and home appliances that rely on Mexican manufacturing.
Mineral Fuels and Oils
Canada is the largest exporter of crude oil and refined petroleum to the U.S. A 25 percent tariff would increase fuel costs, affecting gas prices and heating oil. This means consumers would likely see higher prices at the pump, with several cents per gallon being added to gasoline and diesel prices.
Plastics and Plastic Products
Canada and Mexico supply a significant amount of plastic materials and products used in packaging, construction and consumer goods. Tariffs would raise costs for businesses and consumers across industries that rely on plastic.
Machinery and Industrial Equipment
Canada and Mexico also export heavy machinery, engines and industrial tools used in manufacturing and construction.
If Trump's tariffs are imposed, U.S. industries will face higher costs for equipment, such as industrial machinery, boilers and electrical equipment. The higher costs could slow down construction and manufacturing projects, which in turn could hit companies in those industries.
"If you voted for Trump because you thought he was going to bring down the cost of housing, a lot of our lumber, cement and other materials comes from Canada, which means that construction costs are going to go up," commentator Catherine Rampell said on CNN on Monday.
Aluminum and Steel Products
Canada is a top supplier of aluminum and steel, which are essential for construction, automotive manufacturing and packaging. Tariffs would raise the cost of raw materials, affecting industries that use these metals and even products such as soda cans.
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