How will Trump tariffs impact consumers? It depends, but here are estimates

SALT LAKE CITY — Economists are warning that President Donald Trump’s tariffs on China, Mexico, and Canada could raise costs in America. 

Associated Press reported the new Trump tariffs on China are meant to stop fentanyl production. A 10% tariff was imposed, which went into effect on Tuesday. 

He also ordered tariffs on Mexico and Canada, in a move to curb illegal immigration. AP reported a 25% tariff on each of the nations, with an additional 10% tariff on Canadian oil, electricity, and natural gas. 

He later delayed their effective date to March 1 after the nations said they would boost security on their borders. 

Trump tariffs’ potential cost to Americans

According to the Tax Foundation, a nonprofit that researches tax policy, the proposed Trump tariffs could lead each U.S. household to spend an additional $625 per year. 

“Both estimates understate the cost to U.S. households because they do not factor in the lost output, lower incomes, and loss in consumer choice the tariffs have caused,” wrote the Tax Foundation. 

In the past, tariffs imposed by Trump and former President Joe Biden raised prices and lowered employment and output, the foundation said. 

For research purposes, The Tax Foundation put together two tariff scenarios to estimate their economic impacts.

In the first model, the foundation began with 20% tariffs universally. Then they added a second 50% tariff on China. In that scenario, the tariff would reduce economic output by 1.3%. 

The second model included a 25% tariff on imports from Mexico, a 10% tariff on Chinese imports, and 25% on Canadian imports, excluding energy resources. That model resulted in an estimated 0.4% reduction in economic output. 

Neither of the estimates factored in foreign retaliation. Visit the Tax Foundation’s website for more details. 

Tariffs explained

Although tariffs are sometimes used to promote job growth in the country and persuade consumers to purchase American-made goods, CNN reported that some economists agree they often lead to inflation. 

While the country hit with tariffs could be penalized, that isn’t always the case. They aren’t paid by companies sending goods away, but rather by those receiving them. 

According to BBC, if an American importing firm pays a higher price to import, they may pass it on to consumers by charging more. In that case, it would increase the price of imported goods. 

Alternatively, the importer could choose not to raise their price, absorbing the tariff cost and therefore decreasing their profits. 

The decision is left to each individual company. 

What industries are most likely to be impacted? 

Many electric devices and their components are manufactured in China, as reported by CNN. Although China was previously exempt from tariffs, Trump’s new order changes that. 

Similarly, CNN reported that the prices of fashion items like shoes and jewelry would be impacted. 

BBC predicts that tariffs on Canada and Mexico could raise the price of vehicles.

According to CarGurus, several well-known makes and models are made in Canada. The list included the Chevrolet Silverado, Toyota RAV4, and Dodge Charger, to name a few.

Similarly, U.S. News listed several well-known models as being made in Mexico, such as the Chevrolet Trax and the Honda HR-V.

BBC also predicts a rise in the cost of some food items such as imported beer, maple syrup, and avocados could arise under the tariffs. 

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