President Trump’s recent announcement of new tariffs on imports from China, Canada, and Mexico has sent shockwaves through global stock markets. The S&P 500 fell nearly 2% before recovering slightly, while the tech-focused Nasdaq and Dow Jones industrial average also closed down. European and Asian markets were hit as well, with substantial declines seen across various industries.
The tariffs have also strained US-Canada relations, with many Canadians feeling that something has been irrevocably broken. Monika Morelli from Montreal canceled her subscriptions to American companies Netflix and Amazon and called off a planned trip to New Orleans. A national poll found that 91% of Canadians want their country to rely less on the US in the future.
The threat of tariffs has united Canadians from all political backgrounds, with a surge in national pride and a “Buy Canadian” sentiment being pushed by politicians and the public. Provinces are removing barriers to internal trade and encouraging people to support local businesses. It remains to be seen if this signals a fundamental shift in the centuries-old relationship between the two countries.
For American consumers, the tariffs are likely to result in higher prices on a wide range of products. The 10% tariff on China could affect over $450 billion worth of imports, including consumer goods like electronics, footwear, and toys.
Trump’s tariffs impact markets and prices
Businesses will face increased production costs, which may lead to less money for workers, hiring, and investment. If the postponed tariffs on Mexico and Canada go into effect, the impact could be even more significant. Mexico provides a large portion of US fruit and vegetable imports, so grocery prices would rise.
The integrated North American auto industry means vehicle costs would increase. And with the majority of softwood lumber and drywall imports coming from Canada and Mexico, housing and construction costs would go up as well. Analysts estimate that the combined tariffs could add about $2,700 to the average price of a vehicle in the US.
In some regions, gas prices could rise 10-20 cents per gallon. The Tax Foundation calculates that tariffs on China alone will increase the average tax burden per US household by $172 in 2025. As Doug Ford, premier of Ontario, put it, “US-based businesses will now lose out on tens of billions of dollars in new revenues.
They only have President Trump to blame.” Experts caution that the tariffs could trigger inflation, weigh on global growth, and inadvertently create a business-unfriendly environment. For now, consumers may want to stock up on certain goods and make significant purchases sooner rather than later to mitigate some of the impending price hikes.
