Implications of Trump’s November Trade Cuts on U.S. Businesses and Purchasing Power-Shell Products from Mexico, Canada and the United States

Businesses and shoppers in the U.S. are bracing for higher prices on everything from gasoline to guacamole, as President Trump renews his threat to impose steep tariffs this weekend on imports from two of the country’s biggest trading partners.

Sweeping tariffs were one of Trump’s marquee campaign promises leading up to the election in November. He has previously threatened tariffs of up to 60 percent on goods from China and up to 100 percent on goods from Mexico. Despite this, Trump failed to levy any tariffs on day one of his presidency, with Bloomberg reporting on Thursday that his administration lacked even concepts of a plan. The first round is expected to hit goods from Mexico and Canada.

While the size and scope of the tariffs is still uncertain, many businesses are making contingency plans. Trade data released on Wednesday showed a sharp rise in imports in December, suggesting some companies tried to stockpile goods before any tariffs take effect.

“Importers were trying to bring in goods ahead of time,” says Matthew Martdin of Oxford Economics. “Holding inventory isn’t without its costs or its risks. Businesses are optimistic that there will be enough demand to keep this inventory off their shelves.

Some shoppers tried to circumvent the tariffs. Personal spending on durable goods such as autos and televisions jumped in December, according to figures released Friday by the Commerce Department. Mexico is the number one producer of flat-screen TVs.

General Motors told financial analysts on Tuesday that it could shift some pickup truck production out of Mexico and Canada if tariffs are imposed. The trade landscape is still uncertain, and that’s why the automaker is reluctant to act.

The Effect of Retaliatory Trade Tariffs on the Economy and the Economy of the United States: From Clothing to Electronics, Trump has Made a Deal

Martin said that the increase in expenses would lead to increased costs for consumers and businesses around the country.

Martin said equity markets don’t like tariffs on Canada and Mexico. “It would really hurt the economy and hopefully that dissuades him from going full bore. This may be a negotiating tactic.

The countries that have been targeted may retaliate with their own tariffs. Canada is reportedly planning retaliatory tariffs targeted at products made in Republican and swing states. Mexico PresidentClaudia Sheinbaum said that her country had a plan in response to the US tariffs, and that the targeted products were similar to the ones that helped Trump get elected. Again, Americans won’t pay for it but tariffs could hurt them like they did with soybeans during Trump’s first term.

Even though China is the third-highest trading partner of the US, Trump was considering a 10% tariffs on everything from cheap clothing to electronics.