The cost of key consumer goods are set to rise as President Donald Trump’s tariffs against Mexico and Canada went into effect on Tuesday.
A 25% tariff on goods from the two countries went into effect even though Trump has been repeatedly warned by economic experts that consumers would bear the burden of his actions. Trump has—without evidence—claimed that foreign governments would absorb the costs but historically companies have passed on costs to the consumer and that is the likely outcome of Trump’s actions.
There was an immediate global reaction to Trump’s decision.
China increased tariffs from between 10% to 15% on key goods imported to that country from the U.S. including beef, wheat, chicken, and soybeans. Those tariffs will be on top of the existing tariffs China put in place in response to Trump’s trade war in 2018.
Mexican President Claudia Sheinbaum plans to announce her country’s tariff on American goods on Sunday.
Canada also announced new tariffs on American goods, while Mexico’s government said it would announce tariffs on Sunday.
The stock market rejected the decision, with the Dow Jones Industrial Average dropping 715 points, adding to losses the market experienced on Monday anticipating the bad economic news.
Numerous household staples are predicted to experience a price hike because of Trump. Fruits and vegetables from Mexico could soon see price increases, along with meat and poultry and other food items from Canada. Thanks to the tariffs against China, electronic prices could increase—including video game consoles and cellphones. The cost of shoes, cars, and auto parts are also in the crosshairs of Trump’s tariff decree.
“The consumer will likely see price increases over the next couple of days,” Target CEO Brian Cornell told CNBC in a discussion of the Trump tariffs.
The rapid negative economic turnaround is occurring even though Trump inherited a booming economy from former President Joe Biden. Biden spent much of his presidency working to reinvigorate American business after Trump mishandled the outbreak of COVID-19.
Now Trump, who ran on a platform of lowering consumer costs, has put in place a policy that will hit Americans directly in the wallet.
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