Wyatte Grantham-Philips, Associated Press
NEW YORK (AP) – US President Donald Trump’s long-standing tariffs are here, plunging the country into an escalating trade war with China, Canada and Mexico.
Trump’s 25% tariff on imports from Canada and Mexico came into effect Tuesday, increasing the collection of 20% on Chinese goods. In response, all three countries announced retaliatory measures.
Experts say consumers and businesses will be hit hardest. Large and small businesses will have a higher cost for products purchased from other countries. For consumers, that probably means everything from cars, appliances and other expensive items to smaller, everyday purchases of electronics, gasoline, groceries and more.
How do Canada, Mexico and China respond?
Canada, Mexico and China all declared on Tuesday that they would impose retaliatory taxes on many US products.
China imposes tariffs of up to 15% on a wide array of major US farm exports, including American-grown chicken, pork, soybeans and beef. It also expanded the number of US companies to make controls and other restrictions about 20 times.
Meanwhile, Canadian Prime Minister Justin Trudeau has announced over 21 days that his country will slap tariffs on more than $100 billion in American goods. And Mexican President Claudia Sheinbaum said her country will respond with its own retaliatory tariffs on US goods. However, unlike Canada and China, she said she will not announce certain tariffs until Sunday. Perhaps it shows that Mexico still wants to break away from the trade war.
“Wendong Chan, assistant professor of applied economics and policy at Cornell University,” said:
Canada and Mexico will suffer significantly more than the US because of the size of the US economy and the strengthening of the dollar, Chan added. For the US, the total tariffs on China, Canada and Mexico could result in a GDP loss of about 0.4%, he said, exceeding $100 billion.
If the US economy is struggling, tariffs can be short-lived. But Trump could also impose tariffs on additional countries such as India and the EU, with more products like computer chips and medicines. The president injects disorientation and unpredictable volatility into the global economy, leaving it off-balance so that people wonder what they will do next.
What is the impact on US business?
A wide range of products manufacturers and retailers will feel the impact.
“International trade is extremely important to our business and industry,” said Corie Barry, CEO of Best Buy, in a revenue call Tuesday. “The consumer electronics supply chain is very global, technical and complex. China and Mexico continue to be the number one and second sources of products on sale, respectively.”
The goal is that sales and profits slipped during the key holiday quarter as customers kept spending down, and there will be “meaning pressure” on the company’s profits in early 2025 due to tariffs and other expenses, CEO Brian Cornell said at the annual investors meeting on Tuesday.
In addition to car parts coming from China, the supply chains of auto companies across the US, Canada and Mexico borders can be disrupted.
How does customs duties affect consumers?
Tariffs on China can affect a variety of consumer products, including mobile phones, children’s toys, clothing, and more, Americans buy daily.
Some companies are working to slow or reduce the impact on consumers by stockpiling what is possible and returning manufacturers and suppliers to the US or other countries that are not affected by the new tax.
Still, it’s easier to stock some items than others. Also, even some “Made-in-usa” products may contain plastics and packaging, for example, from China. The wider supply chain shifts are also complicated and not easy to implement.
When it comes to consumer electronics, “Our assortment vendors expect to pass on some tariff costs to retailers, making it very possible for American consumers to rise in prices,” says Best Buy’s Barry.
And as the US spends billions of dollars on fruits and vegetables imported from Mexico and Canada each year, shoppers could face even more sticker shocks in the grocery aisle. New tariffs could also raise the prices of tequila, mezcal, whiskey, and other spirits made in those countries.
Tariffs add another “mental calculation” to consumers, along with other price pressures today, such as the rising prices of eggs due to the avian flu, Zhang says. He adds that shoppers need to look more closely at the prices of everyday items.
When do customers see prices rise?
It’s not exactly clear when consumers see prices rise, but fresh foods could be the first hit.
Especially during colder months, retailers rely on foreign imports of fresh fruits and vegetables, and long-term storage is not an option. Shoppers can start looking at the prices of agricultural products such as avocados coming from Mexico.
However, he added that the extent to which prices rise will depend on how things unfold over the coming weeks.
“I think things are unfolding very quickly,” Cornell said. “We look at this carefully, are these long-term tariffs? Is this a short-term action? How will this unfold over time? I think we’re all guessing. I think we’re going to listen, learn and confirm that we have control over what we have control. But we don’t want to overreact to a day and one headline now.”
Associated Press authors Anne D’Nynenzio of New York and Paul Wiseman of Washington, DC, contributed to this report.
Original issue: March 5th, 2025, 7:22am EST
