Americans could pay more if Trump makes good on his tariff threats

CNN
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President Donald Trump expanded his tariff threats over the weekend, calling for 30% levies on two of America’s largest trading partners: the European Union and Mexico.

Those tariffs are set to take effect August 1, unless either party inks a trade deal or takes other measures that cause the president to reverse course. If that does not happen, Americans could get stuck paying more for an extensive list of goods.

But as is the case with the various tariffs Trump has already imposed — including the nearly universal 10% and the 25% tariffs on goods from Canada and Mexico that don’t already comply with his own free-trade deal known as the United States-Mexico-Canada-Agreement — it can take time for tariffs to translate into higher prices.

For instance, inflation reports from the last three months have shown prices have remained stable despite higher tariffs. The Trump administration maintains that “the cost of tariffs will be borne by foreign exporters who rely on access to the American economy, the world’s biggest and best consumer market,” Kush Desai, a White House spokesperson, said in a statement to CNN.

That’s not exactly the full story, though, given importers pay tariffs up front, and while they may absorb some of the tax themselves, oftentimes they end up having to pass it on to consumers via higher prices.

If Trump follows through with the 30% tariffs, here’s what Americans could shell out more money for:

Already, tomato prices are poised to increase as of Monday, with a key tomato-specific free-trade agreement between the United States and Mexico set to expire.

But that’s hardly the only produce Mexico ships to the US that could get more expensive.

Last year, the US imported $46 billion of agricultural products from Mexico, according to data from the US Department of Agriculture. That includes $8.3 billion worth of fresh vegetables and $9 billion of fresh fruits, with avocados accounting for $3.1 billion of that total.

Medical equipment and surgical supplies

Many of the EU’s biggest exports to the US are already facing higher tariffs in Trump’s second term. That includes 25% tariffs on cars and car parts as well as 50% tariffs on steel and aluminum. Trump has also said tariffs on semiconductors and pharmaceuticals, two other big sources of EU exports to the US, are in the works.

The 30% tariffs on the EU, if implemented, would be “separate” from sectoral tariffs, Trump said in his letter to European Commissioner President Ursula von der Leyen.

Putting those sectoral tariffs aside, Americans may have to pay more for another top EU export to the US: medical equipment.

Last year the US imported $16 billion worth of medical equipment and surgical supplies from the EU, according to US Commerce Department data.

After Trump slapped higher tariffs on China in his first term, the US has looked more to Mexico for electronics than to China, which used to be a preferred source.

Now, as the US’s biggest trading partner, the top foreign source of electronic goods that came in to the US last year was Mexico. That includes $49 billion worth of computers, $20 billion worth of electrical equipment and $13 billion of audio and video equipment.

Mexico and the EU each shipped over $11 billion worth of beer, wine and distilled spirits to the US last year, according to USDA data.

Meanwhile, the EU has previously indicated it would respond to higher tariffs by taxing American alcoholic beverages at higher levels. That’s why the Distilled Spirits Council of the US, whose members include Constellation Brands, Brown-Forman and Bacardi, among several others, has been advocating against higher tariffs on alcohol, especially from the EU, given the negative impact it can have on domestic producers.