President Donald Trump’s long-threatened tariffs have taken effect, launching the US into a full-scale trade war with China, Canada, and Mexico. These tariffs impose a 25% tax on imports from Canada and Mexico and a 20% tariff on Chinese goods, prompting swift retaliatory measures from all three countries. As a result, the cost of everyday goods—ranging from electronics and appliances to food and fuel—is expected to rise, hitting both businesses and consumers hard.
While Trump argues these tariffs will protect American industry and bring back manufacturing jobs, experts warn they could lead to higher prices, supply chain disruptions, and economic losses. Wendong Zhang, an assistant professor at Cornell University, cautions that “all of the economies involved in the tariffs will see a loss in their real GDP and increasing consumer prices in general.” With Canada and Mexico imposing billions in counter-tariffs and China targeting US agriculture, the economic impact could be significant. Here’s a breakdown of the key questions surrounding these tariffs and their consequences.
What are Trump’s tariffs, and who do they target?
Trump has imposed a 25% tariff on imports from Canada and Mexico and a 20% tariff on Chinese goods. These tariffs apply to a wide range of products, including electronics, auto parts, food, and consumer goods.
How are other countries responding?
China, Canada, and Mexico have all announced retaliatory tariffs on US products:
China: Up to 15% tariffs on US farm exports, including soybeans, pork, beef, and chicken.
Canada: Tariffs on $100 billion worth of American goods over 21 days.
Mexico: Tariffs on US products to be announced, with a potential focus on agriculture and industrial goods.
Also read: ‘Dumb’ trade war turns serious: After China, Canada files WTO complaint against US tariffs
How will these tariffs affect consumers?
Higher tariffs mean higher prices for everyday items. Electronics, groceries, gasoline, and appliances could all see price hikes. Target CEO Brian Cornell warned that tariffs will put “meaningful pressure” on profits and consumer spending.
Will American businesses be affected?
Yes, retailers and manufacturers that rely on imported goods will face higher costs, which will likely be passed on to consumers. Best Buy CEO Corie Barry noted that the company’s supply chain is “highly global, technical, and complex,” making price increases “highly likely.”
Which industries are most at risk?
Retail – Electronics, clothing, and everyday consumer goods may become more expensive.
Automotive – Car prices may rise due to supply chain disruptions.
Agriculture – US farmers are at risk as China cuts back on imports of soybeans, pork, and corn.
Food & Beverage – The price of fruits, vegetables, whiskey, and tequila could increase.
How much could these tariffs cost the US economy?
Zhang estimates a 0.4% GDP loss, equating to over $100 billion. Canada and Mexico could suffer even greater losses due to their smaller economies and reliance on US trade.
Are these tariffs permanent?
It’s uncertain. If the US economy suffers significantly, Trump may be forced to roll back tariffs. However, he has also threatened additional tariffs on countries like India and the EU, targeting more products such as computer chips and pharmaceuticals.
How do tariffs work?
A tariff is essentially a tax on imports, which businesses must pay when bringing goods into the US Importers pass these costs onto consumers, resulting in higher prices. While Trump argues that foreign exporters “shoulder the cost,” economic studies suggest the burden falls largely on American businesses and shoppers.
How soon will consumers feel the effects?
For perishable goods like fruits, vegetables, and meat, price increases could happen within days or weeks. Cornell noted that shoppers could see prices for Mexican avocados rise “as early as in a few days.” Other goods, like electronics and appliances, may take longer to reflect tariff-related price hikes.
Why is Trump imposing these tariffs?
Trump claims the tariffs will:
Protect American manufacturing by making foreign imports more expensive.
Raise revenue to help pay for tax cuts.
Serve as a negotiation tool to pressure trade partners.
Have tariffs like this been used before?
Yes, but not at this scale. The US had high tariffs until the 1930s, but after the Smoot-Hawley Tariff Act contributed to the Great Depression, trade policies shifted toward free trade agreements. Trump’s tariffs mark the highest US tariff levels since 1943.
What happens next?
The global economy is in a state of uncertainty. If tariffs remain in place, inflation could rise, supply chains may be reshaped, and businesses may adjust by shifting production away from China, Mexico, or Canada. However, as Cornell put it, “things are unfolding so quickly… we don’t want to overreact to one day and one headline.”
(With inputs from agencies)