President-elect Donald Trump has announced plans to impose a sweeping 25% tariff on goods imported from two of the United States’ largest trading partners, Mexico and Canada, starting on January 20—his first day in office. While the move is touted as a step to prioritize American manufacturing and address trade imbalances, it has already raised alarms about its impact on everyday Americans who could face higher prices on essential goods.
The proposed tariffs come at a time when the U.S. is increasingly dependent on imports from its North American neighbors. Mexico recently surpassed China as the largest exporter to the U.S., and Canada ranks a close third. For consumers and businesses alike, the proposed 25% tariff could ripple through the economy, making everything from gas to groceries significantly more expensive.
A Pricey Trade-Off: Gasoline to Get Costlier?
Canada supplies the U.S. with a substantial portion of its crude oil—4.3 million barrels per day. This crude is refined to produce gasoline, diesel, and heating oil, fueling American households and industries. A tariff on Canadian oil could increase gas prices by 25 to 75 cents per gallon in regions like the Midwest, Rockies, and Great Lakes, where reliance on Canadian crude is especially high.
“You can’t simply process different oil overnight. It would take investments and years. More U.S. supply wouldn’t help,” explained Patrick De Haan, head of petroleum analysis at GasBuddy, in a recent post on X (formerly Twitter).
Produce Prices: Avocados and More at Stake
Climate change has made U.S. agriculture less viable for certain crops, increasing reliance on imports from Mexico. In 2022 alone, the U.S. imported $44.1 billion worth of agricultural products from Mexico. Among these imports, avocados have become a staple—90% of the avocados consumed in the U.S. were imported that year.
Under the new tariffs, the price of avocados could skyrocket, making popular dishes like guacamole and avocado toast luxuries for many Americans.
Cars and Car Parts: Driving Up Costs
Mexico serves as a major hub for auto manufacturing, supplying parts crucial for the production of vehicles by U.S. automakers. In 2022, $44.76 billion worth of vehicles were imported from Mexico. The proposed tariff would disrupt this supply chain, likely leading to higher production costs and, ultimately, pricier cars for consumers.
Alcohol Prices to Surge
The U.S. imports 80% of its beer from Mexico, along with tequila and mezcal, which have become staples in bars and households nationwide. In 2023, the U.S. imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico, according to the Distilled Spirits Council.
Tariffs on spirits could trigger a chain reaction, leading to increased prices, decreased demand, and potential job losses in the hospitality industry—a sector still recovering from the pandemic’s financial hit.
Economic Fallout: Concerns Over Costs and Jobs
Businesses and economists are warning that the proposed tariffs could have a far-reaching economic impact. The increased costs of imports are likely to be passed on to consumers, resulting in higher prices for everyday items. Additionally, disrupted supply chains could lead to job losses in industries ranging from automotive to agriculture.
The potential tariffs echo the trade war Trump waged during his first term, when he targeted China with sweeping tariffs to boost U.S. manufacturing and address national security concerns. Although President Joe Biden maintained most of these tariffs and added new ones, this new trade war with North American allies marks a significant escalation.
What’s Next?
While the tariff plan is intended to support domestic industries, its timing raises questions about its long-term viability. With Mexico and Canada deeply integrated into the U.S. economy, the move risks straining ties with key trading partners and burdening American consumers with higher prices.
As the January 20 implementation date looms, businesses and consumers alike are bracing for the potential fallout of these tariffs, which promise to reshape how Americans interact with everyday goods—whether it’s at the gas pump, grocery store, or car dealership.
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