The Trump Tariff's
What impacts might we see due to President Trump's Tariff's on Mexico, Canada and China?
President Donald Trump announced last week that he will be imposing sweeping Tariff’s on Mexico, Canada and China. Mexico and Canada will get hit with a 25% tariff while China will only be hit with a 10% tariff.
What is a Tariff?
A Tariff is a tax on a foreign nation for products they import into another country. This also brings in another source of revenue for a government - a possible reason why Trump is implementing these Tariffs against the three nations.
How will the tariffs impact the U.S.?
Trump’s sweeping tariffs will have an impact on various goods and products coming from countries, particularly Agriculture, Electronics and Automobiles/Automobile parts.
As of 2023,70% of our produce is imported from Mexico along with 51% of fresh fruit (Canada contributes much lower), highlighting the interconnectivity of other North American produce trade. This also highlights the potential issue with imposing a 25% tariff on Mexico - while we don’t yet know how much prices will increase, it’s a safe bet they will.
Other goods we’ll likely see an increase on are electronics such as cell phones, computers, TVs and more. Auto parts that are imported will also likely see an increase.
As of this writing, the Dow opened down more that 500 points as investors fear how these tariffs will impact the economy. Per President Trump, he admits there may be short term “hurt” but long term this will be good for America.
Impact on Inflation:
Economists warn that the tariffs may contribute to higher inflation. The increased costs of imported goods can lead to price hikes across various sectors, potentially causing inflation to rise by 0.4 percentage points.
What about Taxes for Everyday Americans?
The tariffs function as a form of taxation on foreign nations, with the costs often passed on to consumers through higher prices. This situation mirrors previous instances where tariffs led to increased consumer costs and necessitated compensations for affected industries.
In summary, the newly imposed tariffs are expected to lead to higher prices for a range of consumer goods, contribute to inflationary pressures, and effectively act as a tax increase on American households. It’s to early to tell if this will be a short term issue, or if it will extend long term.
-OS1