Businesses and shoppers are prepared for higher prices if Canada and Mexico tariffs go into effect Saturday

Implications of Trade Warfare for the U.S. Economy and the Trade Landscape: Trump’s Threat to Impose High-Tariffs on Imports from Canada and Mexico

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.

Trump told reporters at the White House Thursday that he intends to impose a 25% tax on imports from Canada and Mexico starting Saturday in order to stem the flow of immigrants and drugs across the country’s northern and southern borders.

Many businesses are creating contingency plans despite the size and scope of the tariffs. According to trade data released on Wednesday, there was a sharp rise in imports in December.

“Importers were trying to bring in goods ahead of time,” says Matthew Martdin of Oxford Economics. It’s costs or risks that inventory isn’t without. Businesses clearly believe that they will not be waiting on this inventory for a long time.

Some individual shoppers also tried to beat the tariffs. Figures released Friday by the Commerce Department show that personal spending on durable goods increased in December. Mexico is a leading 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 isn’t settled yet, which makes the automaker hesitant to act.

The Problem of a Deal with the US: How Long Will the All-Out Trade War Survive? It Could Be Very Long, Does It Matter?

Martin said that increasing expenses by 25% will lead to higher costs for consumers and businesses around the country.

Equity markets would not like 25% tariffs for Canada and Mexico. “It would really hurt the economy and hopefully that dissuades him from going full bore. This might be a negotiating tactic.

The president has said that the tariffs on Canada and Mexico are punishment for immigration and Fentanyl coming into the US from those countries. But he uses them as petty bargaining chips, too — earlier this month, he briefly vowed to impose tariffs on Colombian imports like coffee unless the country accepted military deportation flights. As potentially disruptive as tariffs could be, there are a lot of “ifs” here. The Trump administration is already behind on its own schedule. It reportedly still doesn’t know exactly which tariffs it will be imposing. And its last sweeping policy change — a chaotic freezing of federal funds — was promptly blocked by a court and then walked back amid confusion and public anger. So it’s anyone’s guess how long an all-out trade war could last — if it happens at all.

The US is the third- largest trading partner with China and Trump was considering imposing a 10 percent tariffs on all of them, a source of cheap clothing and electronics.