Trump’s Tariff Salvo: The Price Pain US Consumers Will Have To Face
Every day in America, people eat fruit grown from the earths of Mexico, live in homes built from Canadian lumber, and drive cars to work, made from car parts both from Mexico and Canada. These are all things which are famously created and imported from these two countries into the US. When Trump’s tariffs hit the economy, it will cause disruptions in the supply chain and Americans will be stuck with higher prices, and not only due to the tariff effect. Tariffs will increase inflation, but it will also cause certain consumers to “bulk buy” certain products so they can “save for the future”. Here are the products American wallets will have to take the hit on…
As many, many conversations strike up a whirlwind of economic predictions, Trump has officially announced it. Save the date: February 1st, 2025 – when tariffs of 25% launched on Canada & Mexico, and 10% on China, all of which took effect exactly three days later, on February 4th. This, the president warns, could readily have American consumers feeling “hurt” as a result – and as a student who has studied economics, this could spell some chaos upon several aspects of the US economy:
Raising prices in groceries, houses, cars, and… virtually anything that isn’t domestically produced!
Consumers trying to “get ahead of the game”
Inflation, inflation, inflation (again).
Upping the Costs
First of all, tariffs are an import tax. Anything that is brought into the US supply chain from any other country will cost a lot more, a price eventually paid by American consumers. Given the tariffs are highest for imports coming from Canada and Mexico (and that the US is reliant on them for lumber and produce respectfully) American consumers will have to suffer price hikes in fresh fruits/vegetables, as well as housing. According to the National Public Radio, Mexico has provided nearly ⅔ of US vegetable imports, and half of fruit and nut imports in the US Agricultural Department. Tariffs on these imports means the prices for those avocados (90% of which come from Mexico), bell peppers, delicious strawberries and more will soar, and given that it’s winter, it doesn’t help that Mexico is the leading supplier for all of them. Not to mention, the US is increasingly reliant on Mexico (and Canada as well!) for their fresh produce, US important volume raising “nearly 200% over the past two decades”, in TIME Magazine’s article.
Not only that, but anyone waiting for housing prices to lower will face major disappointment. New housing is already expensive enough to build, but get this – Canada and Mexico are both leading suppliers of lumber for the US supply chain, making up over 70% in US imports of the two most crucial building materials – softwood lumber and gypsum. With the tariffs, housing prices will inevitably spike, making it even harder for American consumers who are already struggling to find a decently priced home.
Lastly, Canada is one of the biggest exporters of car parts and energy, including hydropower, crude oil, and natural gas. Michael Hicks, an economist at Ball State University then stated that the price of a sedan was set to increase around 2,000$, and that an SUV, whose composition involves a multitude of different electronic components, could go up even more – possibly around 5,000$.
Higher Prices Will be Harder to Avoid, So…
If Trump sticks to these tariffs, let’s see what would happen when we observe consumer psychology. Remember the toilet paper incident during the COVID-19 pandemic? When consumers frantically stockpiled toilet paper due to expected supply shortages? These tariffs are no different! No matter what, if the tariffs hold, the costs of tariffs will be hard to dodge, but if people begin panicking, and demanding too much of supply because of a change in expectations, “you can actually create high price and shortages where there isn’t even a tariff effect,” says Lincicome. Things will become more expensive and there is no controlling it, whether it's from people mass-consuming before the storm, or if tariffs come into effect. It’s a situation where consumers bear higher tax burden and makes them poorer. As York says, “there is no winning a trade war.”
The most basic issue is that tariffs will create a big distortion in the supply chain for the US, as a globalised supply chain means many, many products are imported. Goods will cross borders, from country to country, before making it to the hands of producers and consumers. What grand effect Trump’s tariffs will have on the world’s organized production is difficult to navigate or predict. But one thing’s for sure, the tariffs have and will negatively affect Canadian, Mexican and American companies as well, along with their employees.
Nonetheless, there will always be two sides to a coin, Trump’s tariff strategy may unlock opportunities, but in trade economics, consumers will lose. Hopefully, the strategy will not prove catastrophic.
References
Rachel, Lukasz. “Will Trump’s Tariffs Boost the US Economy? Don’t Count on It.” The Conversation, 19 Feb. 2025, theconversation.com/will-trumps-tariffs-boost-the-us-economy-dont-count-on-it-249621.
Semuels, Alana. “How Trump’s Tariffs Could Affect U.S. Consumers.” TIME, Time, 4 Feb. 2025, time.com/7212594/trump-tariffs-impact-consumers/.
Wamsley, Laurel. “Here’s How Trump’s Tariffs Could Impact You and Your Wallet.” NPR, 5 Feb. 2025, www.npr.org/2025/02/05/nx-s1-5284991/trump-tariffs-higher-prices-inflation-mexico-canada-china.
Wolak, Sarah. “Trump Tariffs Would Result in Homebuilder Price Increases.” HousingWire, 8 Nov. 2024, www.housingwire.com/articles/trump-tariffs-price-hikes-homebuilders/.