(CLO) On Saturday, President Donald Trump imposed steep tariffs on three of America's largest trading partners, Canada, China and Mexico, citing a national emergency related to the flow of fentanyl and undocumented immigrants into the country.
The measure, which is set to take effect on Tuesday (February 4), includes a 25% tariff on all imports from Mexico and most goods from Canada (with the exception of some energy items such as crude oil, which are exempted from a 10% tariff).
As for China, the US will impose an additional 10% tax on imported goods from this country, in addition to the various tariffs that have been previously imposed, such as 100% on electric vehicles (EVs), 50% on solar panels and 25% on EV batteries, steel, aluminum, masks and some other products.
American consumers will have to spend more on most essential items in the future. Illustration photo: Unsplash
Economists warn that these policies could have a negative impact on US businesses and consumers, especially as many have struggled with rising inflation in recent years.
The U.S. Chamber of Commerce warned that tariffs would not solve long-standing problems at the border and could instead “disrupt supply chains” and raise the cost of living for American families.
About a third of imports into the United States come from the three countries affected by the decision. The products affected include a number of essential items that Americans use every day, such as fruits, vegetables, meat, gasoline, cars, electronics, toys, clothing, lumber, beer and wine.
Food
Mexico and Canada play important roles in the U.S. food supply. Mexico is the largest supplier of fruits and vegetables, and Canada is the leading exporter of grains, meat, poultry, and other agricultural products.
The new tariffs could increase the prices of these products, as grocery retailers have low profit margins and find it difficult to absorb the additional costs. This could lead to higher food prices for American consumers.
The United States has become increasingly reliant on food imports, particularly from Mexico, as climate change impacts domestic production. Last year, the United States imported $46 billion in agricultural products from Mexico, including $9 billion in fresh fruit (of which avocados accounted for $3.1 billion), $8.3 billion in fresh vegetables, $5.9 billion in beer, and $5 billion in distilled spirits.
Fuel and energy
Last year, the United States imported $97 billion worth of oil and gas from Canada, making it Canada’s largest export to its neighbor. Thanks to the expansion of the Trans Mountain pipeline, the United States is increasingly dependent on Canadian oil.
While the tariff on Canadian energy is only 10%, lower than the 25% on other goods, it could still impact gas prices, especially if it lasts through the summer. The biggest impact would be on Midwest states.
Cars and auto parts
Mexico is the largest source of cars and auto parts for the United States, importing $87 billion worth of cars and $64 billion worth of parts last year (excluding December). Canada also exported $34 billion worth of cars to the United States.
Inflation is expected to rise in the US following Mr. Trump's new import tax policy. Illustration photo: Unsplash
Mary Lovely, a senior fellow at the Peterson Institute for International Economics, said the auto industry would likely “panic” over the new tariffs. U.S. automakers have kept their production costs low by hiring cheap labor in Mexico, but a 25 percent tariff could erode that advantage. Given the heavy investment in existing factories, shifting production elsewhere would be difficult, which could lead to significant price increases.
Steel
Although the United States is no longer the manufacturing-centric economy it once was, it still consumes tens of millions of tons of steel each year, serving important industries such as auto manufacturing, oil, construction, and infrastructure.
Canada and Mexico are two of the three largest sources of steel for the United States. During his first term, President Trump imposed a 25% tariff on steel imports from most countries in June 2018, but Mexico and Canada were exempted thanks to free trade agreements.
Canada currently accounts for nearly 25% of U.S. steel imports by weight, while Mexico accounts for about 12%, according to data from the American Iron and Steel Institute.
But there is empirical evidence that the 2018 tariffs on steel and aluminum increased production costs, and that these costs were ultimately passed on to consumers, according to economist Won Sohn.
Beer and wine
Beer and spirits may be recession-proof, but they certainly aren’t immune to tariffs. The United States imported $5.69 billion worth of beer and $4.81 billion worth of wine from Mexico in 2023, according to the International Trade Administration. The combined value of those two items has increased 126% since 2017, making them the 10th largest import category from Mexico last year.
In addition to pushing up the prices of raw materials like steel, aluminum and grains, tariffs could also expose the U.S. beer and wine industry to retaliation from trading partners.
House construction and furniture
Softwoods—derived from pine, spruce, fir, and other conifers—are favored for their light weight, ease of working, and durability. They have many uses, but are most important in the U.S. homebuilding industry, where they are used for framing, roofing, and siding.
Currently, about 30% of the annual lumber used in the United States comes from Canada. Economists and construction experts warn that the United States does not have enough production capacity to meet domestic demand. Tariffs or restrictions on Canadian lumber imports could exacerbate the housing affordability crisis.
It’s not just lumber that’s at risk, but other home building materials. In 2023, 71% of the $456 million in imported lime and gypsum (mostly used to make drywall) came from Mexico, according to the National Association of Home Builders (NAHB).
When factoring in raw materials imported from Canada, Mexico and China — including steel, aluminum and appliances already hit by tariffs — the NAHB estimates the new tariffs could increase the cost of imported building materials by $3 billion to $4 billion.
Electronics, toys, home appliances
Consumer electronics such as cell phones, televisions, laptops, game consoles and the components that power them are among the top items the US imports from China. China is also a major supplier of home appliances.
Toys and footwear are also vulnerable to Trump’s tariff threats. According to the Footwear Distributors and Retailers of America, more than half (56%) of shoes sold in the United States are made in China.
The United States also relies on China for toys and sports equipment, importing 75% of these items, including footballs, soccer balls and baseballs. These products would be hit hard by the new tariffs.
Ha Trang (according to UCD, NAHB, CNN)
Source: https://www.congluan.vn/hang-hoa-se-dat-do-hon-o-my-do-thue-quan-moi-tu-thuc-pham-nhien-lieu-den-do-dien-tu-post332730.html
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