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Home Local News “Potential Impact of Trump Tariffs on Canada and Mexico: From Avocados to Automobiles”

“Potential Impact of Trump Tariffs on Canada and Mexico: From Avocados to Automobiles”

From avocados to autos, Trump tariffs on Canada and Mexico could hit close to home
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Published on 31 January 2025
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WASHINGTON – Tariffs that President Donald Trump plans to slap on imports from Canada and Mexico as soon as this weekend could drive up the price of everything from gasoline and pickup trucks, to Super Bowl party guacamole dip.

Trump’s tariffs threaten to blow up the trade agreement he himself negotiated with America’s neighbors in his first term. His U.S.-Mexico-Canada Agreement – “the fairest, most balanced, and beneficial trade agreement we have ever signed into law,’’ Trump once declared — was supposed to bring predictability to North American trade, giving businesses the confidence to make investments.

Here are just a few of the imported goods that could be hit first.

A “GRENADE’’ LOBBED INTO AUTO PRODUCTION

For decades, auto companies have built supply chains that cross the borders of the United States, Mexico and Canada. More than one in five of the cars and light trucks sold in the United States were built in Canada or Mexico, according to S&P Global Mobility. In 2023, the United States imported $69 billion worth of cars and light trucks from Mexico – more than any other country — and $37 billion from Canada. Another $78 billion in auto parts came from Mexico and $20 billion from Canada. The engines in Ford F-series pickups and the iconic Mustang sports coupe, for instance, come from Canada.

“You have engines and car seats and other things that cross the border multiple times before going into a finished vehicle,’’ said Cato’s Lincicome. “You have American parts going to Mexico to be put into vehicles that are then shipped back to the United States.

“You throw 25% tariffs into all that, and it’s just a grenade.’’

In a report Tuesday, S&P Global Mobility reckoned that “importers are likely to pass most, if not all, of this (cost) increase to consumers.’’ TD Economics notes that average U.S. car prices could rise by around $3,000 – this at a time when the average new car already goes for $50,000 and the average used car for $26,000, according to Kelley Blue Book.

HIGHER PRICES AT THE PUMP

Canada is by far America’s biggest foreign supplier of crude oil. From January through November last year, Canada shipped the U.S. $90 billion worth of crude, well ahead of No. 2 Mexico at $11 billion.

For many U.S. refineries, there’s not much choice. Canada produces the “type of crude oil that American refineries are geared to process,’’ Lincicome said. “It’s a heavier crude. All the fracking and all the oil and gas we make here in the United States – or most of it – is a lighter crude that a lot of American refineries don’t process, particularly in the Midwest.’’

Trump said Thursday that he hasn’t yet decided whether to include Canadian and Mexico oil in the tariffs he still plans impose Saturday.

If he did tax Canadian oil imports, Lincicome said, “how the heck does that shake out? My guess is that it shakes out just through higher gas prices, particularly in the Midwest.’’ TD Economics figures that Trump’s tariffs could push up U.S. gasoline prices by 30 cents to 70 cents a gallon.

EXPENSIVE AVOCADOS – JUST IN TIME FOR THE SUPER BOWL

For American consumers still exasperated by high grocery prices, a trade war with Canada and Mexico could be painful. In 2023, the U.S. bought more than $45 billion in agricultural products from Mexico –including 63% of imported vegetables and 47% of fruits and nuts. Farm imports from Canada came to $40 billion. A 25% tariff could push prices up.

“Grocery stores operate on really tiny margins,’’ Lincicome said. “They can’t eat the tariffs … especially when you talk about things like avocados that basically all of them – 90% — come from Mexico. You’re talking abut guacamole tariffs right before the Super Bowl.’’

U.S. farmers are nervous, too, that Canada and Mexico will retaliate by slapping tariffs on American products such as soybeans and corn. That’s what happened in the first Trump administration. China and other targets of Trump tariffs hit back by targeting the president’s supporters in rural America. Exports of soybeans and other farm products dropped, so Trump spent billions of U.S. taxpayer money to reimburse farmers for lost sales.

“President Trump was as good as his word,’’ said Mark McHargue, a Central City, Nebraska, farmer who grows corn, soybeans, popcorn and raises hogs. “It did take the sting out of it. That’s for sure.’’ But he would prefer to see the government push to open foreign markets to American farm exports. “We would rather get our money from the market,’’ said McHargue, president of the Nebraska Farm Bureau. “It doesn’t feel great to get a government check.’’

____

Associated Press Writer Josh Boak in Washington contributed this story.

Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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