Tariffs could raise prices for gasoline, avocados and iPhones.
The Trump administration is set to slap tariffs on products from Mexico, Canada, and China, which make up the three largest U.S. trading partners. The move could impact prices for everything from gasoline to avocados to iPhones.
President Donald Trump set March 4 as the start date for 25% tariffs on imports from Mexico and Canada, as well as an additional 10% tariff on Chinese goods — for a total of 20%, as of an amended executive order on Monday afternoon.
Speaking at the White House on Monday afternoon, Trump confirmed that the tariffs would take effect the following day.
The announcement sent major stock indexes plummeting. The S&P suffered its biggest loss since December, closing at 5,849.72 — down 104.78 points or 1.76%. The Dow Jones Industrial Average closed at 43,191.24 down 649.67 points or 1.48%, while the tech-heavy Nasdaq fell 2.64%.
The deadline arrives roughly one month after Trump granted Mexico and Canada a reprieve from such tariffs, having reached agreements with the two countries regarding border security and drug trafficking.
Here’s what to know about the tariffs set to take effect on Tuesday.
Tariffs could upend U.S. trade – unless they don’t happen
In recent days, Trump reaffirmed his commitment to placing tariffs on Canada and Mexico.
In multiple statements, Trump said he intends to move forward with the policy. On Thursday, Trump alleged that drugs had continued to enter the U.S. through Mexico and Canada despite agreements reached last month to address the issue.
“We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH 4 will, indeed, go into effect, as scheduled,” Trump said in a post on Truth Social.
Trump voiced similar concerns about Mexico and Canada ahead of the previous tariff deadline before ultimately pausing the measures.
Commerce Secretary Howard Lutnick on Monday praised Mexico and Canada for their recent efforts to address border security, suggesting that the level of the tariffs remained uncertain.
“[Trump] is going to decide today – we’re going to put it out tomorrow,” Lutnick told CNN, describing the policymaking as a “fluid situation.”
On Monday afternoon, Trump confirmed that the fresh round of tariffs would take effect the following day.
“That will start,” Trump said. “They’ll have to have tariffs.”
If the tariffs stay in place, price increases will be evident by Memorial Day, according to economist Mark Zandi, who also said that prices on food could start rising more quickly – within weeks.
New tariffs could raise prices for some essentials
Tariffs on Mexico, Canada and China could raise prices for a vast array of goods, experts previously told ABC News.
Tariffs of this magnitude would likely increase prices paid by U.S. shoppers since importers typically pass along a share of the cost of those higher taxes to consumers, experts said. The policy could hike prices for products ranging from tomatoes to tequila to auto parts.
Higher costs for car production could pose a challenge for U.S. automakers, many of which depend on a supply chain closely intertwined with Mexico and Canada.
“The automobile sector, in particular, is likely to see considerable negative consequences, not only because of the disruption of the supply chains that crisscross the three countries in the manufacturing process but also because of the expected increase in the price of vehicles, which can dampen demand,” Gustavo Flores-Macias, a professor of government and public policy at Cornell University, told ABC News in a statement.
In a statement on Monday from the American Automotive Policy Council, which represents members like Ford and General Motors, AAPC President Matt Blunt said, “Our American automakers, who invested billions in the U.S. to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American workforce, while our competitors from outside of North America benefit from easy access to our home market.” He called for an exemption from the tariffs for American automakers.
Mexico and Canada account for 70% of U.S. crude oil imports, which make up a key input for the nation’s gasoline supply, according to the U.S. Energy Information Administration, a government agency.
Trump previously said Canadian energy resources such as oil and gas would be subject to 10% tariffs, excluding the products from 25% tariffs faced by all other imports from the country.
The U.S. imported $38.5 billion in agricultural goods from Mexico in 2023, making it the top recipient of such products, U.S Department of Agriculture data showed. Those imports include more than $3 billion worth of fresh fruits and vegetables.
Roughly 90% of avocados eaten in the U.S. last year originated in Mexico, USDA data showed. Other products with a high concentration of Mexican imports include tomatoes, cucumbers, bell peppers, jalapenos, limes and mangos.
Targeted countries may retaliate
The fresh tariffs may trigger retaliation from Mexico, Canada and China.
In anticipation of tariffs last month, Canadian Prime Minister Justin Trudeau threatened retaliatory tariffs on $155 billion worth of goods and urged Canadians to choose Canada-made products over their American counterparts. And Ontario Premier Doug Ford said Monday that imposing the tariffs would be an “absolute disaster” for both the U.S. and Canada. He added, in part, “I don’t want to respond but we will respond like they’ve never seen before.”
Mexican President Claudia Sheinbaum said she had instructed officials in her government to implement Plan B, “which includes tariff and non-tariff measures in defence of Mexico’s interests.”
Speaking to reporters on Monday, Sheinbaum said recent talks between the U.S. had gone “very well” but that Mexico retains options if necessary.
“We are going to wait and see what happens,” Sheinbaum said. “In that, you need to have mettle, serenity and patience, and we have Plan A, Plan B, Plan C, Plan D, so we are going to wait for today.”
After Trump amended his executive order on Monday afternoon — just hours before tariffs were meant to take effect, and effectively increasing China’s tariffs by 10% for a total of 20% — a Chinese Ministry of Commerce spokesperson responded on Tuesday morning local time by calling the move a “typical unilateral and bullying behaviour” that will cause “damage to China-US economic and trade cooperation and the normal international trade order.”
Source: abcNEWS
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