Newly imposed tariffs by US President Donald Trump on Canada, Mexico, and China became effective Saturday, raising the cost of groceries and economic fallout concerns. A 25% tariff, threatened by Trump even before he assumed office last month, is now fully in place, leaving experts concerned about supply chain disruptions and inflation.
The government has provided explanations for tariffs against Canada and Mexico, alleging their inability to halt illegal immigrants entering the country as well as the flow of fentanyl entering the US. On the other hand, the 10% tariff against imports from China has been issued in light of China’s role in the making of the drug.
Grocery Prices Skyrocket
US relies heavily on Canada and Mexico for crucial food products, such as avocados, dairy, grain, livestock, meats, and poultry. With tariffs in place now, consumers are likely to find that grocery prices go up because supermarkets source many of their fruits and vegetables from neighbouring countries.
While it is not yet certain whether all imported products will be affected, Trump had indicated earlier that the pharmaceutical and steel industries were certain to come under siege. Grocery retailers are also said to operate on thin profit margins, making it challenging to absorb higher costs, though these could be passed on to consumers.
Economic and Industry Risks
Trump has also cited trade deficits with all three countries as reasons for the tariffs. However, analysts caution that blanket tariffs on the US’s biggest trading partners could carry significant economic costs, especially to industries dependent on cross-border trade.
The auto sector is expected to be hit especially hard, with Canadian and Mexican light vehicle imports accounting for 22% of all US car sales in 2024, according to S&P Global Mobility. Higher tariffs on crude oil from these countries could also lead to increased energy costs, particularly in the Midwest.
