 "Americans to pay more for their groceries as Trump tariffs on Mexico, Canada and China take effect")
US President Donald Trump’s tariffs on Canada, Mexico and China went into effect on Saturday and with it, prices of groceries that Americans survive on went up as well.
POTUS has been threatening its three trading partners with a 25 per cent tariff since before he took office last month and now that they are in full force, experts are apprehensive about their possible effect on supply chains and inflation.
Trump has promised to impose 25 per cent tariffs on immediate neighbours Canada and Mexico, pointing to their failure to stop illegal immigration and the flow of fentanyl across US borders.
He also vowed a 10 per cent rate on imports from China, the world’s second-biggest economy, charging that it had a role in producing the drug.
What will get costlier?
The US depends a lot on its neighbours for items like avocadoes and dairy. But with Trump’s tariffs, an average American’s pocket might feel heavy buying day-to-day groceries.
Supermarkets are mostly stocked with vegetables and fruits manufactured in Mexico and Canada, the latter is the biggest supplier of grain, livestock, meats and poultry.
It is, however, unclear whether the president’s tariffs will affect the prices of all products imported from these countries. Trump had earlier suggested that they would target specific industries like pharmaceuticals and steel.
Agricultural products from Mexico and Canada could become more expensive for consumers, as grocery retailers typically have thinner profit margins than most industries. With limited ability to absorb higher tariff costs, they may need to pass these expenses on to shoppers.
Impact Shorts
More ShortsExperts warn of consequences
The United States runs “big deficits” with all three countries too – and this is another issue the president has honed in on.
But imposing sweeping tariffs on the three biggest US trading partners carries risks for Trump, who swept to victory in November’s election on the back of public dissatisfaction over costs of living.
Tariffs would also hit the auto industry hard, with US light vehicle imports from Canada and Mexico in 2024 representing 22 per cent of all vehicles sold in the country, said S&P Global Mobility.
It added that automakers and suppliers also produce components throughout the region, meaning tariffs will likely increase costs for vehicles.
Hiking import taxes on crude oil from countries like Canada and Mexico could also bring “huge implications for US energy prices, especially in the US Midwest,” according to David Goldwyn and Joseph Webster of the Atlantic Council.
With inputs from agencies
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