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Here’s what will get more expensive from 25% tariffs on Mexican and Canadian goods

Here’s what will get more expensive from 25% tariffs on Mexican and Canadian goods
CATASTROPHIC. THE PREMIER OF THE CANADIAN PROVINCE OF PRINCE EDWARD ISLAND SAYS IF PRESIDENT ELECT DONALD TRUMP IMPOSES A 25% TAX ON TRADE WITH CANADA, IT WOULD CAUSE DRAMATIC HARM TO THE ECONOMY ON BOTH SIDES OF THE BORDER. A TRADE WITH THE UNITED STATES REPRESENTS ABOUT 25% OF OUR GROSS DOMESTIC PRODUCT EACH YEAR. CATASTROPHIC. IF WE’RE NOT ABLE TO MAINTAIN THAT RELATIONSHIP GOING FORWARD. BUT EQUALLY AS DEVASTATING FOR THE CONSUMERS OF THE UNITED STATES. THE PREMIER MET WITH GOVERNOR KELLY AYOTTE, WHO RELEASED A STATEMENT TO NEWS 9 SAYING, QUOTE, I LOOK FORWARD TO WORKING TO STRENGTHEN ECONOMIC TIES WITH CANADA, ONE OF OUR STATE’S LARGEST TRADING PARTNERS, AND COOPERATE ON ISSUES OF MUTUAL IMPORTANCE. STATE ECONOMIC OFFICIALS SAY IF A 25% TARIFF GOES INTO EFFECT, IT WOULD DEFINITELY HAVE AN IMPACT ON NEW HAMPSHIRE. WE HAVE SUCH A TRANSFER OF GOODS AND SERVICES ACROSS THE BORDER ON A REGULAR BASIS. ANYTHING THAT DOES THAT IS GOING TO NEGATIVELY IMPACT OUR ECONOMY. WHAT IS YOUR REACTION, PREMIER, TO PRESIDENT ELECT TRUMP TALKING ABOUT CANADA AS THOUGH IT COULD BE SUBSUMED INTO THE UNITED STATES IN SOME WAY? LOOK, I AM A GREAT ADMIRER OF THE UNITED STATES AND HAVE BEEN FOR FOR ALL OF MY LIFE. ONE OF OUR GREAT PRIVILEGES AS CANADIANS TO GROW UP NEXT TO THIS WONDERFUL COUNTRY. AND WE’VE HAD THIS LONG STANDING RELATIONSHIP. I RESPECT DEMOCRACY AND THE WAY IT WORKS HERE. AND THE AMERICAN PEOPLE STOOD LOUDLY IN NOVEMBER AND MADE THEIR CHOICE. AND WE RESPECT THAT VERY MUCH. PRESIDENT TRUMP HAS A LOT THAT HE NEEDS TO BEGIN TO IMPLEMENT BEGINNING ON JANUARY THE 20TH. AND I WANT TO MAKE SURE AS A SMALL, YOU KNOW, GOVERNMENT OPERATOR ON THE OTHER SIDE OF THE BORDER, I WANT TO DO THE BEST I CAN TO WORK WITH HIM. BUT WE HAVE TWO SOVEREIGN COUNTRIES THAT ARE THE BEST OF FRIENDS, THE BEST OF NEIGHBORS. WE HAVE THIS INTEGRATED ECONOMY THAT HAS BEEN GOING ON FOR CENTURIES, AND WE NEED THAT
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Here’s what will get more expensive from 25% tariffs on Mexican and Canadian goods
President Donald Trump said Monday he still intends to move forward with an across-the-board tariff of 25% on Mexican and Canadian goods, though he said those levies would come on February 1 rather than his previous day-one threat, Trump said in an Oval Office signing ceremony.Video above: Premier of Prince Edward Island warns against imposing tariffsThe tariffs, if enacted, could strain Americans' wallets, especially given Mexico and Canada are two of America's top three trade partners. Collectively, they accounted for 30% of the value of all the goods the U.S. imported last year, according to federal trade data.While Trump claims foreign exporters pay the tariffs, U.S. consumers stand to foot a portion of the bill, too, as retailers are unlikely to absorb the added costs fully.Retailers have taken some preemptive steps to stave off increasing prices, including stockpiling goods and shifting production away from countries that could get hit by tariffs. But those measures may only protect consumers for so long. Additionally, many goods can't feasibly be stockpiled or be produced elsewhere.Here's where a 25% tariff on Mexican and Canadian goods could hit Americans hardest:Cars and car partsThe U.S. imported $87 billion worth of motor vehicles and $64 billion worth of vehicle parts from Mexico last year, not accounting for December, the top two goods imported from there that year, according to Commerce Department data. (December trade data is not yet available.)Motor vehicles were also the second-largest good the U.S. imported from Canada last year through November, for a total of $34 billion.The auto sector is likely "apoplectic" about the new potential tariffs, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. U.S. car companies have been able to keep production costs down by hiring lower-wage workers, particularly in Mexico, where much of their production has shifted to in recent years.But that cost saving will essentially be erased if there's a 25% tariff, she said. Car manufacturers are unlikely to move their production elsewhere, given they've made sizable investments in existing plants in both countries and it is difficult to source all the raw materials to build cars and their parts from other places.GasThe U.S. imported $97 billion worth of oil and gas from Canada last year, that country's top import. The U.S. has become more reliant on Canadian oil since the expansion of Canada's Trans Mountain pipeline, according to data from the U.S. Energy Information Administration.That has helped deliver more oil to be refined to much of the West Coast in addition to the Midwest.When Trump initially floated the 25% tariffs in November, Patrick De Haan, head of petroleum analysis at GasBuddy, estimated it would hike the cost of gas for Americans by between 25 cents and 75 cents per gallon. That would most directly impact Americans located around the Great Lakes, Midwest and Rockies, he predicted.Food and alcoholic beveragesLast year, the U.S. imported $46 billion of agricultural products from Mexico, according to US Department of Agriculture data. That includes $8.3 billion worth of fresh vegetables, $5.9 billion of beer and $5 billion of distilled spirits.Constellation Brands, which imports Modelo and Corona beer as well as Casa Noble tequila from Mexico, could see its costs leap 16% under Trump's proposed tariff and would likely have to raise prices by about 4.5%, Chris Carey, a Wells Fargo equity analyst, said in a November note.But the biggest category of agricultural imports from Mexico last year was fresh fruits, of which the U.S. imported $9 billion worth, with avocados accounting for $3.1 billion of that total.These products now all stand to cost consumers more, especially since grocers and farmers tend to operate on very low profit margins compared to other industries, giving them little leeway to absorb higher tariffs costs, and instead will pass it down to consumers, said Lovely.

President Donald Trump said Monday he still intends to move forward with an across-the-board tariff of 25% on Mexican and Canadian goods, though he said those levies would come on February 1 rather than his previous day-one threat, Trump said in an Oval Office signing ceremony.

Video above: Premier of Prince Edward Island warns against imposing tariffs

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The tariffs, if enacted, could strain Americans' wallets, especially given Mexico and Canada are two of America's top three trade partners. Collectively, they accounted for 30% of the value of all the goods the U.S. imported last year, according to federal trade data.

While Trump claims foreign exporters pay the tariffs, U.S. consumers stand to foot a portion of the bill, too, as retailers are unlikely to absorb the added costs fully.

Retailers have taken some preemptive steps to stave off increasing prices, including stockpiling goods and shifting production away from countries that could get hit by tariffs. But those measures may only protect consumers for so long. Additionally, many goods can't feasibly be stockpiled or be produced elsewhere.

Here's where a 25% tariff on Mexican and Canadian goods could hit Americans hardest:

Cars and car parts

The U.S. imported $87 billion worth of motor vehicles and $64 billion worth of vehicle parts from Mexico last year, not accounting for December, the top two goods imported from there that year, according to Commerce Department data. (December trade data is not yet available.)

Motor vehicles were also the second-largest good the U.S. imported from Canada last year through November, for a total of $34 billion.

The auto sector is likely "apoplectic" about the new potential tariffs, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. U.S. car companies have been able to keep production costs down by hiring lower-wage workers, particularly in Mexico, where much of their production has shifted to in recent years.

But that cost saving will essentially be erased if there's a 25% tariff, she said. Car manufacturers are unlikely to move their production elsewhere, given they've made sizable investments in existing plants in both countries and it is difficult to source all the raw materials to build cars and their parts from other places.

Gas

The U.S. imported $97 billion worth of oil and gas from Canada last year, that country's top import. The U.S. has become more reliant on Canadian oil since the expansion of Canada's Trans Mountain pipeline, according to data from the U.S. Energy Information Administration.

That has helped deliver more oil to be refined to much of the West Coast in addition to the Midwest.

When Trump initially floated the 25% tariffs in November, Patrick De Haan, head of petroleum analysis at GasBuddy, estimated it would hike the cost of gas for Americans by between 25 cents and 75 cents per gallon. That would most directly impact Americans located around the Great Lakes, Midwest and Rockies, he predicted.

Food and alcoholic beverages

Last year, the U.S. imported $46 billion of agricultural products from Mexico, according to US Department of Agriculture data. That includes $8.3 billion worth of fresh vegetables, $5.9 billion of beer and $5 billion of distilled spirits.

Constellation Brands, which imports Modelo and Corona beer as well as Casa Noble tequila from Mexico, could see its costs leap 16% under Trump's proposed tariff and would likely have to raise prices by about 4.5%, Chris Carey, a Wells Fargo equity analyst, said in a November note.

But the biggest category of agricultural imports from Mexico last year was fresh fruits, of which the U.S. imported $9 billion worth, with avocados accounting for $3.1 billion of that total.

These products now all stand to cost consumers more, especially since grocers and farmers tend to operate on very low profit margins compared to other industries, giving them little leeway to absorb higher tariffs costs, and instead will pass it down to consumers, said Lovely.