Price increases by Trump's possible trade conflicts with Mexico and Canada

Price increases by Trump's possible trade conflicts with Mexico and Canada

During the first term of office of the elected President Donald Trump, America began a comprehensive trade war against China to strengthen the US industry, to secure national security interests and to solve a trade relationship that Trump was very unbalanced.

consequences of the trade future

President Joe Biden kept most of these tariffs and also introduced some new ones. While the leaders of both nations continue to get together, the US consumers paid for these tensions and spend more money for goods from China.

Trump turns Mexico and Canada to

Now Trump focuses on the largest trading parties of America: Mexico and Canada. He promises something extraordinary: on January 20, the day of his inauguration, raise that the United States imported from its closest neighbors -goods that come across the border due to the US Mexico-Kanada Agreement (USMCA) negotiated by Trump.

The effects on consumers

That means: prepare for a possible trade war that could have a serious impact on your wallet. Here are some of the most important consumer goods that Americans receive from their neighbors in the north and south and who could become more expensive if Trump continues with his customs plan:

1. Petrol

raw tone, which is refined to petrol and heating oil, is one of the most important imports in the USA from Canada. According to data from the US Energy Information Administration, the import reached a record of 4.3 million barrels per day in July, which is due to the expansion of the trans mountain pipeline in Canada.

The expansion has contributed to delivering more oil that is refined on the west coast and in the middle of the country. Patrick de Haan, head of petroleum analysis at Gasbuddy, explains: "You can't just process different types of oil overnight. It would need investments and years. More US offer would not help."

The customs of 25 % proposed by Trump would have "massive effects" on gasoline prices, which could mean an increase of 25 to 75 cents per gallon, said de Haan. Americans would be particularly affected around the big lakes, in the middle west and in the Rocky Mountains.

2. Food: fruit and vegetables

90 % of the avocados that Americans consumed in 2022 were imported. 89 % of them came directly from Mexico. This means that your guacamole and avocado toast could be significantly more expensive if 25 % tariffs are collected on Mexican deliveries.

3. Cars

In 2023, the United States imported vehicles worth $ 44.76 billion from Mexico, which made it the most important imported. More and more car manufacturers have shifted their production to Mexico to bypass tariffs to Chinese goods, and Mexico has developed into a global center for car factories.

The share prices of American car manufacturers were strong on Tuesday, with General Motors recording the greatest decline and closing by 9 %. Almost all American automobile manufacturers are dependent on parts from Mexico, as these are significantly cheaper than parts produced in the USA. An inch of 25 % could have significant changes here.

4. Alcohol

The majority of the alcohol imported after the USA comes from Mexico. For example, Mexico delivered over 80 % of the overall imported beers to the USA in the first three quarters of the 2024 financial year. Tequila from Mexico and liqueurs from Canada are "key drivers for the growth of imports" of spirits, according to the US Ministry of Agriculture.

conclusion: The effects of the new tariffs

The new round of tariffs that Trump plans comes at a time when the USA is increasingly dependent on imports from Mexico and Canada. Mexico overtook China last year as the largest exporter of goods to the USA, a significant change in trade.

The new tariffs that Trump promised will be almost inevitable for Americans, since companies will probably pass on these loads to consumers at higher costs.

Reporting by CNN’s John Towfighi.