Tariffs Are Here? What It Could Mean for the U.S.

On February 1, 2025, President Donald Trump announced the implementation of 25% tariffs on imports from Canada and Mexico, alongside a 10% tariff on Chinese goods. Additionally, only a 10% tariff on Canadian energy is currently in effect. The move has sent shockwaves through various industries and raised concerns about rising consumer prices and economic repercussions. However, in recent developments, Trump has decided to pause the implementation of these tariffs, citing ongoing negotiations and economic concerns.

As history has shown, tariffs often have unintended consequences, leading to higher costs for businesses and consumers alike. In our recent article, Trump’s Tariffs: The Impact of Canadian Energy on the U.S, we covered how tariffs on Canadian energy would impact U.S consumers and businesses. In this article we will expand our analysis of how these tariffs impact the broader U.S. economy, the top products imported from Canada and Mexico, and the major companies affected by this decision.

How Tariffs Lead to Higher Prices for Consumers

Tariffs function as a tax on imported goods, increasing their costs. These additional costs are often passed down the supply chain, ultimately resulting in higher prices for American consumers. For example:

• A 25% tariff on vehicles and auto parts increases the average price of a U.S. car by around $3,000 (according to TD Economics).
• Higher tariffs on agricultural products, like avocados and tomatoes, could raise grocery prices.
• Electronics and machinery imported from Mexico may become more expensive, impacting industries that rely on these components.

While tariffs are sometimes used to encourage domestic production, they can also lead to retaliatory tariffs from trading partners, further exacerbating economic uncertainty. Canada has already responded by imposing counter-tariffs on select U.S. goods, while Mexico and China have announced plans to introduce their own retaliatory measures in the coming weeks. However, the pause has introduced uncertainty about the future of these trade measures.

Top U.S. Imports from Canada and Mexico

The U.S. imports over $500 billion worth of goods from Canada and Mexico every year. The newly announced tariffs are set to disrupt trade flows and impact a variety of industries, including automotive, energy, technology, agriculture, and consumer goods.

Top U.S. Imports from Canada

1. Crude Oil and Petroleum Products
   • Canada is the largest supplier of crude oil to the U.S.
   • In 2023, U.S. crude oil imports from Canada totaled over $158 billion.
2. Vehicles and Automotive Parts
   • Canada’s automotive industry is deeply integrated with the U.S.
   • Exports of vehicles and auto parts to the U.S. exceeded $50.6 billion in 2023.
3. Agricultural Products
   • The U.S. imports significant agricultural goods from Canada, including wheat, canola, pork, beef, and dairy products.
   • In 2023, U.S. agricultural imports from Canada were valued at $30 billion, with dairy products and meats being the largest contributors.
4. Lumber and Wood Products
   • Canada is the largest foreign supplier of softwood lumber to the U.S., accounting for approximately 80% of U.S. softwood lumber imports.
   • U.S. imports of Canadian wood products were valued at $27.1 billion in 2023.

Top U.S. Imports from Mexico

1. Vehicles and Automotive Parts
   • Mexico is a leading supplier of cars, trucks, and auto components.
   • U.S. imports of Mexican automotive products totaled $75 billion in 2023.
2. Computers, Electronics, and Machinery
   • Includes televisions, smartphones, circuit boards, and industrial machinery such as factory automation systems, material handling equipment, and heavy-duty manufacturing tools.
   • Mexico exported $50 billion worth of electronics and machinery to the U.S. in 2023.
3. Agricultural Products
   • The U.S. relies heavily on Mexico for fresh produce.
   • Top imports include avocados, tomatoes, berries (including strawberries, raspberries, and blueberries), citrus fruits such as limes and oranges, peppers, cucumbers, and tequila.
   • In 2023, U.S. agricultural imports from Mexico were valued at $36 billion.

Top Companies Impacted by the Tariffs

The new tariffs will significantly impact multinational corporations that rely on Canadian and Mexican imports for their supply chains and product offerings.

Automotive Industry

• • General Motors (GM): Manufactures vehicles such as the Chevrolet Silverado, GMC Sierra, and Chevrolet Equinox in Canada and Mexico, along with critical auto components like engines and transmissions.
  • Ford Motor Company: Imports a large percentage of its Mustang Mach-E and Bronco Sport from Mexico.
  • Stellantis (Chrysler, Dodge, Jeep, RAM): Produces RAM trucks, Jeep Compass, and other models in Mexico.
  • Toyota: Operates plants in Canada and Mexico, producing the Toyota Tacoma pickup and RAV4, which are among its most imported models to the U.S.
  • Honda: Manufactures Civic and CR-V models in Canada and Mexico, supplying a significant portion of U.S. demand.
  • Magna International: A major Canadian auto parts supplier, providing components like transmissions, seating, and body systems to multiple U.S. automakers.
  • Linamar Corporation: A key Canadian manufacturer of powertrain and driveline components, heavily affected by supply chain cost increases.

Technology & Electronics

• Foxconn – Manufactures Apple products, Dell computers, and other electronics in Mexico.
• Flex (Flextronics) – Produces consumer electronics such as smartphones, laptops, and televisions, as well as industrial electronics including automation systems, semiconductor components, and telecommunications equipment for U.S. companies.
• Jabil Inc. – Manufactures printed circuit boards and electronic components in Mexico, which are essential for consumer electronics like smartphones and laptops, industrial automation systems, and automotive electronic control units (ECUs). These components are critical for telecommunications infrastructure, medical devices, and aerospace applications as well.

Agriculture & Consumer Goods

• Grupo Modelo (Anheuser-Busch InBev) – The producer of Corona and Modelo beers, major Mexican exports to the U.S.
• Driscoll’s – Sources a significant amount of strawberries, raspberries, and blueberries from Mexico.
• Whirlpool Corporation – Produces refrigerators, washing machines, and home appliances in Mexico.
• Saputo Inc. – A leading Canadian dairy producer exporting cheese, butter, and other dairy products to the U.S.
• McCain Foods – A major Canadian supplier of frozen potato products, including French fries, to U.S. fast-food chains and retailers.
• Maple Leaf Foods – A top Canadian exporter of pork and processed meats, significantly affected by trade disruptions.

How Long Will These Tariffs Last?

At this stage, it is uncertain if these tariffs will be implemented and how long they will remain in place. The 2018 tariffs on Canada and Mexico lasted for approximately one year before they were lifted in 2019 following renegotiations and the implementation of the USMCA (United States-Mexico-Canada Agreement). The lifting of those tariffs was driven by trade concessions and diplomatic negotiations, but the uncertainty surrounding current tariffs suggests they could remain in effect for an extended period depending on political and economic factors. Several factors will determine their duration:

• Political developments and trade negotiations.
• Economic impact and pressure from U.S. industries.
• Potential retaliatory measures from Canada and Mexico.

If tariffs are implemented, they could remain in place for months or years.

Conclusion

The announced 25% tariffs on Canadian and Mexican imports are expected to have economic implications for U.S. businesses and consumers. Industries such as automotive, technology, and agriculture will feel the biggest impact, as prices across vehicles, electronics, and food products rise.

With Trump’s history of tariffs causing trade tensions, the future remains uncertain whether these tariffs will be implemented or how long they will last. For now, American consumers and businesses should brace for higher costs and potential disruptions in the supply chain.