New tariffs on Mexico, Canada, and China could make life more expensive.
Expanded tariffs on imports from China and other trade partners are part of President-elect Donald Trump’s economic plans once he takes office in January. Though he claims his protectionist trade policy will bring jobs back to the US, Trump’s tariffs will come at a steep cost to consumers and the economy as a whole.
“We’re going to bring the companies back,” Trump said during an October campaign event at the Economic Club of Chicago. “We’re going to lower taxes for companies that are going to make their products in the USA. And we’re going to protect those companies with strong tariffs.”
The trade proposals are an expansion of the tariffs Trump levied against China during his first term (which the Biden administration continued). The tariffs Trump has proposed would likely have a far broader and more negative effect on the economy. They would almost certainly lead to an immediate increase in prices. They could also spark a trade war in which the US and its trading partners enact tit-for-tat policies to damage each other’s economies.
Monday evening, Trump threatened to slap 25 percent tariffs on goods imported from Mexico and Canada “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” (The realities of fentanyl trafficking and migrant flows are more complicated than Trump’s post suggests.) Trump has previously proposed tariffs of up to 60 percent on goods imported from China and has suggested smaller tariffs, 10 to 20 percent, on goods imported from other trading partners like the European Union.
It’s worth noting that Trump makes many threats and does not follow through on them. And a post on Truth Social does not, in any form, constitute an official change in US policy.
But Trump does follow through on some threats, and major US trade partners are taking him seriously. The European Union is already planning to issue retaliatory import taxes should Trump enact his proposed tariffs.
Trump’s tariffs, if enacted, are a recipe for inflation, according to economists. Right now, importers are reliant on the availability of cheap, foreign-made products, particularly from China. If they can’t find equally cheap, high-quality alternatives, prices will rise. Any policy to mitigate the effects of that could take several years to have an effect.
In a second term, Trump and his team seem poised to use tariffs as a threat, no matter the consequences for US consumers and businesses. How tariffs work in the real world
At their core, tariffs are “a fairly simple concept,” Dean Baker, senior economist at the Center for Economic and Policy Research, told Vox. “The tariff’s a tax on imports.
