US President Donald Trump has triggered a trade war by imposing tariffs on imports from Canada and Mexico. Both countries have promised to retaliate. Since the three nations have closely linked economies, with about $2 billion worth of goods crossing their borders daily, this move could have a big impact.
While Trump claims these tariffs are meant to protect American industries, many economists argue they will likely lead to higher prices for US consumers. This is because tariffs are paid by the American companies importing these goods, and they often pass these costs on to customers or reduce imports, leading to fewer products in the market.
Here are six things that could become more expensive:
1. Cars:
Car prices might rise by around $3,000, according to TD Economics. This is because car parts cross the borders between the US, Canada, and Mexico multiple times before final assembly. The added import taxes will likely be passed on to buyers. Economist Andrew Foran of TD Economics noted that free trade in the auto sector has kept prices low for decades, and disrupting this could bring significant costs.
2. Beer, Whiskey, and Tequila:
Popular Mexican beers like Modelo and Corona might get pricier if importers pass on the increased costs to consumers. Modelo, now the top-selling beer in the US, could see price hikes. Spirits like Bourbon, Tennessee whiskey, tequila, and Canadian whisky might also become more expensive. Since these drinks can only be produced in their designated countries, production can't simply shift, potentially leading to supply issues and higher prices.
3. Houses:
Canadian lumber imports are facing new tariffs, which could make building homes more expensive. While Trump claims the US has plenty of lumber, the National Association of Home Builders (NAHB) argues that these tariffs could hurt housing affordability. They warn that higher lumber costs will raise home prices and discourage new construction.
4. Maple Syrup
Canadian maple syrup, which makes up 75% of the world's supply, is another likely casualty of the trade war. Most of this syrup comes from Quebec. Economist Thomas Sampson from the London School of Economics says US households will see direct price increases. Even US-made products that use Canadian ingredients could become more expensive.
5. Fuel Prices:
Canada supplies most of the US’s foreign crude oil. 61% of imports last year came from there. Although energy products face a lower 10% tariff, any reduction in crude oil exports from Canada could push fuel prices up. Many US refineries are designed to process heavier crude oil from Canada and Mexico. If supplies drop, gasoline, diesel, and jet fuel prices could climb.
6. Avocados:
Avocados, mostly grown in Mexico, account for nearly 90% of the US avocado market. New tariffs could cause prices to spike, especially around events like Super Bowl Sunday. The US Agriculture Department has already warned that the cost of avocados and dishes like guacamole could soar.
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