After signing an executive order to raise tariffs on Canada, Mexico and China — three of America’s largest trading partners — President Donald Trump announced a one-month suspension of his new 25% tariff on Mexican imports. This decision came after Mexico President Claudia Sheinbaum Pardo agreed to deploy 10,000 National Guard troops to the U.S. border to curb drug trafficking, while Trump agreed to work to slow the flow of American weapons.
On Saturday, Trump signed an executive order imposing 25% tariffs on Mexico and Canada and a 10% hit on China.
By midday Monday, Trump’s 25% tariff on Canadian goods and a 10% tariff on Chinese goods still appeared on course to begin Tuesday.
Here is what to know about Trump’s tariff plan and how it affects the prices of goods.
What are tariffs?
A tariff is a tax that a government imposes on goods imported from other countries. It is a type of trade regulation used to protect or generate revenue.
Tariffs are not like income or sales taxes. Instead, they are levies — additional fees — placed on products imported to the country.
Monica Morlacco, assistant professor of economics at the USC Dornsife College of Letters, Arts and Sciences, explains its functions.
“Tariffs are typically imposed for protection or revenue purposes,” she said. “A protective tariff increases the price of imported goods relative to domestic goods, encouraging consumers to buy from local producers, who are thus “protected” from foreign competition. A revenue tariff, on the other hand, is mainly used to generate money for the government.”
Who pays the tariffs on imported goods?
Some think the foreign companies that make the goods pay the tariffs, but the cost of a tariff is typically paid by the importer of the goods. When a tariff is imposed, it increases the cost of importing a product into a country.
The importer may absorb the higher cost or pass it on to consumers through higher prices. This means that while the importer pays the initial bill for the tariff, the financial burden often shifts to businesses and consumers in the form of increased prices.
For example, if the U.S. government wants to protect American car manufacturers from foreign competition, it may impose a 10% tariff on imported cars from other countries. If a car that’s manufactured in Japan costs $20,000, an importer must pay an extra $2,000 in tax. The total cost of the imported car would increase to $22,000, which may be passed down to the consumer.
According to the Tax Policy Center, higher prices of goods in the U.S. will lead to fewer consumers buying goods.
In the short run, higher prices for imported goods will reduce consumption of those goods,” they explained. “But in the longer term, the decline in competition from foreign products makes domestic firms less efficient. And less competition will result in higher prices, not just for those goods subject to the tariff but for competing goods that are not—such as those made domestically. In the case of Trump’s tariffs on China, that means US consumers will pay somewhat higher prices.”
What items from Canada could be impacted by Trump’s tariffs?
The following common imports from Canada to the U.S., according to the Bureau of Industry and Security and Trading Economics, could be affected by Trump’s tariffs:
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Iron and steel appliances
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Cereal, flour, starch and milk products
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Carpets and other textile floor coverings
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Wool, animal hair, horsehair yarn and fabric
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Umbrellas, walking-sticks, seat-sticks, whips
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Photographic or cinematographic goods
What items from Mexico could be impacted by Trump’s tariffs?
Items the U.S. imports from Mexico, according to Trading Economics and the OEC, that could be affected by Trump’s tariff plan include:
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Processed fruits and nuts
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Tomatoes, onions, lettuce and cabbage
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Dairy products, eggs and honey
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Coffee, tea, mate and spices
What items from China could be impacted by Trump’s tariffs?
Common imports to the U.S. from China, according to Trading Economics and the U.S. Department of Agriculture, that could be affected by Trump’s tariff plan include:
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Vegetables (especially corn), fruit and nuts
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Soaps, lubricants, waxes, candles, modeling pastes
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Cereal, flour, starch, wheat and milk products
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Dairy products, eggs, honey and edible products
How did Canada, Mexico and China respond?
The three countries immediately responded to Trump’s executive order and vowed to retaliate.
On Sunday, China’s government condemned the Trump administration’s decision to impose a long-anticipated 10% tariff on Chinese imports. However, they also expressed willingness to engage in discussions with the U.S. to prevent further escalation of the conflict.
Meanwhile, Canadian Prime Minister Justin Trudeau announced a retaliatory tariff of 25% of all US imports.
Sheinbaum Pardo had slammed Trump’s “slanderous” claim that her government is working in collusion with the cartels and promised a “Plan B” for retaliatory measures that could include tariff and non-tariff options, she said earlier.
-USA TODAY Network reporter Rachel Barber and Lauren Villagran contributed to this report.
This article originally appeared on Austin American-Statesman: List: Trump tariffs may impact these items from Canada, Mexico, China
