President Donald Trump implemented 25% tariffs on Canada and Mexico, while doubling tariffs on Chinese goods to 20%, a move that will have significant effects on American consumers and businesses. The administration claims the tariffs are needed to curb the flow of fentanyl into the US, but they are expected to raise the cost of many imported goods from these countries, which accounted for over 40% of America’s imports last year.
In response to the US tariffs, Canada’s Prime Minister Justin Trudeau announced retaliatory tariffs on certain American goods, while China also quickly retaliated with its own tariffs on US imports, sparking fears of a damaging trade war. Mexico is expected to announce its own retaliatory measures by Sunday.
The financial markets reacted swiftly. The Dow Jones Industrial Average saw a volatile day of trading, dropping by 800 points before recovering some losses, only to close down by around 670 points (1.55%) at 42,521. The S&P 500 fell 1.22%, while the Nasdaq Composite slipped 0.35%, partially recovering from deeper losses earlier in the day.
Major American retailers and farmers have already voiced concerns about the effects the tariffs will have on their businesses and consumers.
Retailers: Large retailers like Target and Best Buy warned that the new tariffs will lead to higher prices. Target’s CEO, Brian Cornell, stated that the company may need to raise prices on fruits and vegetables due to tariffs on Mexico, Canada, and China. The company also mentioned that “tariff uncertainty” will affect its profits this quarter. Best Buy, which sources many electronics from China and Mexico, expects its vendors to pass on tariff costs, making price hikes for American consumers likely.
Farmers: The American Farm Bureau Federation warned that the tariffs would severely impact rural America. Retaliatory tariffs from Canada and China will target key US agricultural products like corn, soybeans, beef, dairy, and poultry. In 2024, the US exported over $83 billion in agricultural products to China, Canada, and Mexico. In response to the first wave of Chinese retaliatory tariffs during Trump’s first term, the US Department of Agriculture created the Market Facilitation Program to help farmers offset losses.
Farmers and retailers alike are now bracing for the potential economic fallout from the escalating trade tensions.
