Trump's tariffs may be targeted at others -- but they could impact you too

President-elect Donald Trump is threatening to impose steep tariffs on America’s biggest trading partners unless they do more to stop the flow of illegal drugs and immigrants.

In social media posts Monday, Trump vowed to impose a 25% tax on all imports from Mexico and Canada, along with an additional 10% tax on imports from China, as one of his first orders on taking office.

If he makes good on the threat, the impact would be felt in the U.S. too — from the supermarket to the car dealership.

Here are three things to know about Trump’s tariff proposal.

Tariffs may be targeted at others — but Americans would also feel the impact

Trump’s tariffs are intended to try to pressure Canada and Mexico on border policy — as well as to hit China economically.

“It’s time for them to pay a very big price,” the president-elect wrote in a post on his Truth Social platform.

But critics say if the threatened tariffs take effect, it’s U.S. customers and businesses that would end up footing the bill.

In just one high-profile example, the tariffs would raise the price of avocados less than three weeks before the Super Bowl — one of the biggest guacamole-eating days of the year.

Shoppers would see higher prices throughout the produce department, since Mexico and Canada supply 32% of the fresh fruit and 34% of the fresh vegetables sold in the U.S.

“One of President-elect Trump’s signature pledges during the campaign was to tamp down inflation and to reduce prices at the grocery store,” says Lance Jungmeyer, president of the Fresh Produce Association of the Americas, an importers trade group.

“You would see an immediate spike [in prices] at the grocery store. You would see restaurants changing their menus so they could reduce the amount of produce that goes into their plates, or raising prices.”

Trump’s proposed tariff would also likely increase gasoline prices — especially in the Midwest, where Canada supplies much of the crude oil used in U.S. refineries.

American companies could suffer too

It wouldn’t just be American consumers feeling the impact. Businesses that operate across borders would suffer as well.

“I don’t think people quite grasp just how integrated the North American supply chain is,” says Scott Lincicome, a trade expert a the libertarian CATO Institute.

A key example is the U.S. auto industry, which has grown up under the North American Free Trade Agreement and the successor treaty that Trump signed in 2020.

“These days, certain automotive parts like a car seat can travel across international borders five or six times before finally ending up in a made-in-America automobile,” he adds. “That type of seamless trade would be utterly jeopardized by a 25% tariff, thus harming a lot of American manufacturers and manufacturing workers.”

But will Trump actually follow through? That’s still unclear

Under the law, the president has broad authority to impose tariffs. And Trump did slap taxes on many imports during his first term in the White House, typically after going through a lengthy review by the Commerce Department or by the U.S. Trade Representative.

But Trump also threatened to impose many more tariffs than he actually did.

“Donald Trump was willing to tweet out tariff threats, usually in the evening, after watching Fox news, and those tweets typically didn’t come to much of anything,” Lincicome says.

The muted reaction in financial markets Tuesday suggests many investors are discounting the likelihood that the threatened tariffs will take effect.

Canadian Prime Minister Justin Trudeau says he’s already spoken to Trump by telephone. Mexico’s President Claudia Sheinbaum sent a letter to the president-elect. Both foreign leaders have called for cooperation and dialogue.

Whether that results in any meaningful drop in the volume of drugs or immigrants crossing the border remains to be seen.

A spokesman for China’s government cautioned, “No one will win in a trade war.”

But China may already be winning this first round. The additional 10% tariff on imports from China that Trump threatened Monday is a fraction of the 60% levy he called for during the campaign.