NEW YORK — The much-anticipated tariffs imposed by U.S. President Donald Trump have taken effect, marking the beginning of what is shaping up to be a deepening trade conflict with major trading partners China, Canada, and Mexico.
Effective Tuesday, a 25% tariff on imports from Canada and Mexico came into play, alongside an increased 20% levy on goods from China. This move has triggered retaliatory actions from all three nations.
According to experts, the groups most likely to feel the economic impact of these tariffs are businesses and consumers. Many companies, both large and small, are expected to encounter rising costs on internationally sourced products, potentially resulting in unavoidable price hikes for consumers.
For the everyday shopper, this could translate into steeper prices on an array of items—from automobiles and home appliances to smaller scale daily necessities such as electronics, gasoline, and groceries.
In response to the U.S. moves, China, Canada, and Mexico have announced their own retaliatory tariffs on American products.
China has introduced tariffs as high as 15% on essential American agricultural exports like chicken, pork, soy, and beef. Additionally, more U.S. companies now face increased export scrutiny and regulation.
Canadian Prime Minister Justin Trudeau has declared that his country will impose tariffs on over $100 billion worth of U.S. goods within the next 21 days. Meanwhile, Mexican President Claudia Sheinbaum indicated her country would also institute retaliatory tariffs but withheld specific details to allow for potential de-escalation opportunities.
Wendong Zhang, an assistant professor of applied economics and policy, suggests that all countries involved in these tariffs will experience reduced real GDP and heightened consumer prices. While Canada and Mexico are likely to be heavily impacted, the U.S.—despite its larger economy—could see a GDP loss of approximate 0.4%, translating to an economic hit exceeding $100 billion.
There is a possibility that the tariffs will be short-lived if adverse impacts on the U.S. economy grow insurmountable. However, Trump might expand tariffs to cover more countries or items like computer chips and pharmaceuticals, contributing to global economic uncertainty and volatility.
Manufacturing companies and retailers across various sectors in the U.S. are anticipated to bear the brunt of these tariffs. Best Buy’s CEO Corie Barry has highlighted the international trade’s critical significance to their industry, pointing out that a substantial portion of their product supply originates from China and Mexico.
Similarly, Target has already reported a downturn in sales and profits, exacerbated by the tariffs, with expectations of intensified financial pressures in the early part of 2025.
Moreover, the tariff impositions could disrupt automobile supply chains stretched across U.S., Canada, and Mexico borders, alongside auto parts imported from China.
Consumer goods sourced from China, like cellphones, children’s toys, and clothing, could see price increases. Some businesses have sought to mitigate the tariffs’ impact by stockpiling essentials or relocating manufacturing operations back to the U.S. or to unaffected countries.
While some pre-emptive stockpiling offers buffer time, other products, especially those with components from China—even if made domestically—could face challenges. Broader supply chain overhauls remain complex and labor-intensive.
With regard to Best Buy, Barry has noted that vendors are likely to transfer portions of the tariff costs to retailers, making price increases for consumers almost inevitable.
U.S. consumers could potentially witness price rises in grocery stores, mainly given the nation’s substantial fruit and vegetable imports from Mexico and Canada. Spirits like tequila and mezcal may also see cost hikes.
Tariffs add another element of complexity for shoppers already contending with rising costs due to factors like avian flu-driven egg prices, according to Zhang, necessitating a closer watch on everyday purchase costs.
While the exact timeline for when consumers might see price increases remains uncertain, perishables are expected to be affected first. During colder months, reliance on foreign imports for fresh produce like avocados could lead to industry-wide price hikes within days, according to Target’s Brian Cornell.
Cornell emphasized that the scale of price increases hinges on how ongoing tariff discussions unfold, urging caution against reacting prematurely to immediate tariff news.