Six things that could get more expensive for Americans after Trump tariffs

U.S. President Donald Trump imposed tariffs on imported goods from neighboring Canada and Mexico, triggering a trade war. While this move was intended to protect American industries, many economists have warned that these tariffs could lead to price increases for American consumers.

Canada has responded with reciprocal measures, and Mexico has also indicated it will retaliate. The economies and supply chains of these three countries are highly integrated, with an estimated $2 billion worth of manufactured goods crossing borders daily. Tariffs are paid by domestic companies importing goods, which may choose to pass the costs directly to consumers or reduce imports, leading to reduced product availability.

Car prices could potentially increase, with TD Economics estimating a rise of approximately $3,000. This is because car parts cross the borders of the U.S., Canada, and Mexico multiple times before assembly. With increased taxes on imported parts, the costs are likely to be passed on to consumers. TD Economics economist Andrew Foerster stated, "Disrupting these trends through tariffs will come at a significant cost." He also added that "unfettered free trade" in auto manufacturing has existed for decades, leading to lower prices for consumers.

Popular Mexican beer brands Modelo and Corona may see price increases if the U.S. companies importing them pass the increased import taxes on to consumers. However, companies may also choose to reduce imports rather than pass on the costs. The situation is more complex for spirits, an industry that has been largely free from tariffs since the 1990s. Industry bodies from the U.S., Canada, and Mexico issued a joint statement before the tariffs were announced, expressing “deep concern.” They stated that certain brands, such as bourbon, Tennessee whiskey, tequila, and Canadian whisky are “recognized as unique products that can only be produced in their designated countries.” Therefore, given that production of these beverages cannot simply be shifted, supply could be affected, leading to price increases.

Canadian lumber imports will be affected by the U.S. import tariffs. Trump stated that the U.S. "has more lumber than we've ever had." However, the National Association of Home Builders urged the President to exclude building materials from the proposed tariffs, "because they have an adverse impact on housing affordability." The industry body is "gravely concerned" that lumber tariffs could increase the cost of building homes and may deter developers from building new houses. The National Association of Home Builders stated, "Consumers will ultimately pay for the tariffs in the form of higher home prices."

According to Thomas Sampson, an associate professor of economics at the London School of Economics, the "most obvious" household impact from a trade war with Canada is the price of Canadian maple syrup. Canada's multi-billion-dollar maple syrup industry accounts for 75% of the world's total maple syrup production. The majority of this sweet staple—about 90%—is produced in Quebec, where the world's only strategic reserve of maple syrup was established 24 years ago. “Maple syrup is going to be more expensive. This is a direct price increase that households will face,” Mr. Sampson said. “If I buy a good that is produced domestically in the U.S. but uses Canadian inputs, the price of those goods will also go up,” he added.

Canada is the largest foreign supplier of crude oil to the United States. According to the latest official trade data, 61% of U.S. oil imports between January and November last year came from Canada. While Canadian goods imported into the U.S. face a 25% tariff, its energy faces a lower 10% tariff. The U.S. is not currently short of oil, but its refineries are designed to process a type that means it relies on so-called “heavier” crude oil, mainly from Canada and some from Mexico. U.S. fuel and petrochemical manufacturers stated, “Many refineries require heavier crude oil to maximize flexibility in gasoline, diesel, and jet fuel production.” This means that if Canada decides to reduce its crude oil exports in its retaliation to U.S. tariffs, it could lead to price increases at the gas pump.

One food import where U.S. consumers could see a significant price increase is avocados. Avocados are primarily grown in Mexico, which has a warm and humid climate, and account for nearly 90% of the U.S. avocado market each year. However, with the implementation of new tariffs, the U.S. Department of Agriculture warns that the price of avocados, as well as popular dishes such as guacamole, could skyrocket, especially ahead of Super Bowl Sunday on February 9th.