As the imposition of 25% tariffs on imports from Mexico and Canada is scheduled to commence on Tuesday, Hispanic-owned businesses and those reliant on cross-border trade have started to transfer increased costs to consumers and are preparing to significantly decrease imports.
The looming threat of a North American trade conflict has already unsettled the global economy, with a drop in consumer confidence, worsened inflation, and domestic manufacturers, especially in the auto sector, anticipating a downturn.
President Trump has dismissed the notion that tariffs are primarily borne by consumers through increased prices, calling it a “myth.” Despite this, while a stronger U.S. dollar could somewhat alleviate these costs, many economic models indicate that these tariffs could equate to billions of dollars in nationwide tax increases.
Along the border, prices were already on the rise in anticipation of Trump’s tariff announcement, and major disruptions are expected. Jaime Chamberlain, who owns Chamberlain Distributing, a company that works with nine Mexican farming companies, noted that he would be increasing prices for the produce he imports into the U.S., starting Tuesday.
Should the importers of record find themselves unable to meet these increased costs, Chamberlain warns of only having the capacity to support these farmers for a short period. Products including tomatoes, bell peppers, cucumbers, beans, and squash might end up languishing in fields or warehouses, as not everything can be consumed domestically or in Mexico.
Chamberlain anticipates industry-wide dilemmas, with reduced supply and increased prices for produce entering the U.S.
Retailers and restaurants have been bracing since the start of the year for the potential impact on their finances. Raul Luis, who operates Birrieria Chalio Mexican Restaurant in Los Angeles and Fort Worth, Texas, mentioned that restaurants have been stockpiling non-perishable goods in anticipation of price hikes. However, sourcing meat and fruit from Canada and Mexico remains challenging, and catering events add an additional layer of uncertainty to pricing.
Due to these unpredictabilities, his restaurants utilize menus without set prices, allowing for immediate adjustments as costs change. Luis is also contemplating simplifying his menu to avoid costly ingredients but refuses to consider closing either location.
“We must find ways to be more efficient,” he stated. “The pandemic taught us the importance of pivoting and adapting, and our clientele generally understands these challenges.”
Small businesses are particularly at risk, according to Ramiro Cavazos, CEO of the United States Hispanic Chamber of Commerce.
“They lack the operating revenue of larger companies,” Cavazos explained. “They will be on the front lines, forced to pass these costs onto consumers.”
Arizona, benefiting significantly from $20 billion in trade with Mexico, faces economic strain, said Vanessa Nielsen from the Arizona-Mexico Commission. Mexican businesses have pre-emptively increased prices, leading to these being transferred to consumers.
The supply chain is fragile, and strained border relations could hurt communities relying on cross-border shopping, Nielsen added.
Earlier in the month, Trump increased tariffs on steel and aluminum imports from 10% to 25%, potentially raising housing costs and impacting small businesses’ thin profit margins. George Carrillo, CEO of the Hispanic Construction Council, emphasized that construction firms can only stockpile so much based on space and revenue. Future project delays appear inevitable as prices fluctuate.
“Hispanic businesses often have lower pricing to remain competitive,” Carrillo noted. “Now they face a choice: transfer the cost to customers or absorb it themselves?”
