President Donald Trump announced the imposition of tariffs on goods from Canada, Mexico, and China, effective starting Tuesday. In response, Canada and Mexico will implement retaliatory measures, while China warned it would take "necessary countermeasures."
Impact on North American Trade
Currently, trade between the United States, Canada, and Mexico surpasses that with China, reaching $1.8 trillion in 2023, compared to $643 billion with the Asian country. Trump declared an economic emergency, announcing a 10% tariff on Chinese imports and a 25% tariff on goods from Mexico and Canada. Energy products from Canada, such as oil, gas, and electricity, would face a lower 10% tariff.
Automotive Industry: A Supply Chain at Risk
The automotive industry is one of the most vulnerable sectors. Companies have built production chains that cross the borders of the three countries. A report by S&P Global Mobility estimates that more than one in five vehicles sold in the United States is manufactured in Canada or Mexico.
In 2023, the United States imported $69 billion in automobiles from Mexico and $37 billion from Canada. Additionally, auto parts imports totaled $78 billion from Mexico and $20 billion from Canada.
Scott Lincicome, an analyst at the Cato Institute, warned that a 25% tariff on this industry would be a "grenade" thrown at the supply chain. Companies would likely pass the increased costs on to consumers, raising the average car price by approximately $3,000.
Oil and Gasoline Under Threat
Canada is the largest supplier of crude oil to the United States. In 2023 alone, it exported $90 billion in crude, far exceeding Mexico's $11 billion.
U.S. refineries depend on Canadian oil due to its heavier composition, which better suits their refining processes. Lincicome warned that imposing tariffs on Canadian crude could drive up gasoline prices in the U.S. by 30 to 70 cents per gallon.
The Cost of Tequila and Whiskey
The alcoholic beverage sector would also face challenges. In 2023, the U.S. imported $4.6 billion in tequila and $108 million in mezcal from Mexico, along with $537 million in Canadian spirits, including whiskey.
Chris Swonger, president of the Distilled Spirits Council of the United States, noted that the tariffs could impact both consumers and workers in the hospitality industry. "At the end of the day, these measures will only hurt American consumers and threaten jobs in a sector still recovering from the pandemic
Note: AI generated text is not accepted in the community freewriters. Here writing is what humans do.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit