US President-elect Donald Trump – who during the campaign called tariff “the most beautiful word in the dictionary” – wasted little time after his election win before proposing even more stringent tariffs on US trading partners.
Trump’s campaign promises included adding a 10 percent to 20 percent tariff on all non-domestic goods sold in the United States, a 60 percent tariff on goods from China and reciprocal tariffs on nations that impose tariffs on the US. Then, on November 25, Trump promised new 25 percent tariffs on goods from Mexico and Canada and an additional 10 percent tariff on China.
Economists say that Trump following through on these promises could reactivate inflation, a key issue Trump rode to victory in the 2024 election.
Our review of academic studies of real-world tariffs concluded that consumers ultimately shoulder most of the burden in higher prices for goods, and the burden outweighs tariffs’ economic benefits. There is near consensus among economists on this question, surveys show.
Independent groups have estimated that Trump’s proposed tariffs would cost a typical family from $2,000 to $4,000 annually, estimates that were calculated before the most recent tariff proposals.
If fully applied, the new North American tariffs could raise grocery prices, given that Mexico accounted for 69 percent of US vegetable imports and 51 percent of fresh fruit imports in 2022. New tariffs on Canada could also spike gasoline prices, especially in the upper Midwest, which relies on Canadian crude oil imports. Construction prices could rise, too; one-quarter of the lumber used in the US comes from Canada, and both Canada and Mexico supply cement, metals, machinery and other home-building necessities.
