By Barbara Heimlich
Editor
Sources: Tax Foundation, Economic Policy Institute; Detroit Free Press; Associated Press
Editor’s Note: All information is current and accurate as of Friday March 14th!
“Tariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters.” Tax Foundation
Stocks Plummet After Trump Says Tariffs on Canada, Mexico Will Start, Igniting Trade War Fears
Economists are warning that American consumers will be paying more for a host of staple items. Tariff percentages are typically tied to a product’s value, so a 25% tariff on a $10 product, for example, would mean a $2.50 tax for the person or company importing the product.
In practice, high tariffs could lead to high shelf prices for consumers, as importers often raise their prices to make up for the increased cost of tariffs.This is known as “price pass-through,” according to the Economic Policy Institute, a nonprofit think tank that carries out economic research and analyzes the economic impact of policies and proposals.
Earlier in the week, risks of a trade war escalated after Trump threatened to double to 50% a tax on Canadian aluminum and steel in response to a 25% duty from Canada on some of its electricity exports to the U.S. The tit-for-tat plunged markets, which then recovered some ground after Canada backed down. Trump followed suit, a trade war was averted, but damage was done to the stock market. All three major stock indexes closed lower on that rollercoaster day and are continuing to fall as Trump turns his focus now to Europe.
America is among the largest importers in the world, and the U.S. current trade deficit in physical goods and services was $621 billion. This means the goods imported into the United States were over a half trillion dollars more than the value of exports.
The United States’ top exports are as follows:
Machinery (including computers and hardware) – $213.1 billion
Minerals, fuels, and oil – $189.9 billion
Electrical machinery and equipment – $176.1 billion
Aircraft and spacecraft – $139.1 billion
Vehicles and automobiles – $130.6 billion
Medical equipment and supplies – $$89.6 billion
Plastics – $66.5 billion
Gems and precious metals – $63.8 billion
Pharmaceuticals – $48.4 billion
Organic chemicals – $40.2 billion
How Will The Tariff’s Affect Me?
Is a new car on your bucket list? That 25% tariff, totaling 50%, on steel and aluminum imports from Canada if tariffs are reimposed for a significant period of time, could further drive auto-making costs up — even in the U.S. That’s because the North American supply chain is highly integrated, and auto parts may cross the U.S. border several times. Canada and Mexico are the top two US trading partners for both finished motor vehicles and auto parts. Even if automakers open new factories, or increase production at existing plants, it won’t stop tariffs from raising the cost of “American” cars by between $3,000 to $12,000 per vehicle, according to an estimate from the Anderson Economic Group, a Michigan-based think tank.
If you think the housing crisis is bad now…..Houses built from lumber (from Canada) according to the National Association of Home Builders (NAHB) Chief Economist Robert Dietz estimates that the tariffs could add $7,500 to $10,000 to the cost of building an average American family home.
The US imports about $45 billion worth of agricultural products from Mexico and around $40 billion from Canada annually, according to the US Department of Agriculture.
Expect price increases for these products (hint, more than avocados!):
Orange juice,
Peanut butter,
Wine, spirits,
Beer,
Coffee
Maple syrup (from Canada)
Cherry tomatoes (from Mexico)
Avocados (from Mexico)
Dairy Products: Your butter is safe. Canada can charge high tariffs — up to 298.5% — on U.S. dairy products. Those high tariffs kick in only after the US has hit a certain Trump-negotiated quantity of tariff-free dairy sales to Canada each year – and as the US dairy industry acknowledges, the US is not hitting its allowed zero-tariff maximum in any category of dairy product.
Beyond Food:
Appliances
Footwear
Motorcycles
Cosmetics
Pulp and paper.
Clothes (from China)
Laptops and tablets (from China)
Smart phones (from China
Is this information driving you to drink? You might want to hit the liquor store. A trip to BevMax yesterday found that there were already signs indicating limiting purchases of select spirits. Europe’s tax on American whiskey, which was unveiled in response to the Trump administration’s steel and aluminum tariffs, is expected to go into effect on April 1. Trump responded Thursday in a social media post.
“If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES,” Trump wrote. “This will be great for the Wine and Champagne businesses in the U.S.”
Fact Check: Champagne is a legally protected wine that can only come from France’s Champagne region. But U.S. winemakers — including Trump Winery, a Virginia winery owned by the president’s son Eric Trump — do make sparkling wine.
Wine sellers and importers said a tariff of that size would essentially shut down the European wine business in the U.S. Wine and spirits from the 27-nation European Union made up 17% of the total consumed in the U.S. in 2023, according to IWSR (International Wine and Spirits Record) a global data and insight provider specializing in alcohol. Of that 17%, Italy accounted for 7% — mostly from wine – and French wine, cognac and vodka accounted for 5%.
And lastly, you might want to move up that road trip for Spring Break…Mexico and Canada account for about 70 percent of US crude oil imports. The tariffs could lead to a 40-cent or more increase in a gallon of gasoline.
