Description

President Donald Trump’s threat to invoke emergency powers to impose steep tariffs on Mexican, Canadian, and Chinese imports would hit a broad array of goods on which consumers and industry depend. The announced tariff rates are large: 10 percentage points added to tariffs on China, which already average about 10 percent, and 25 percentage points levied on imports from Mexico and Canada, which currently face low rates because of the US-Mexico-Canada Agreement (USMCA). The only exemptions considered are energy imports from Canada, which would face an additional 10 percent tariff.
The value of US imports from its USMCA partners represented almost 30 percent of total import flows into the United States in 2023. As seen in figure 1, the US relies on Mexico for large volumes of transport equipment, fruits and vegetables, electronics, and machinery. Many of these goods are produced in American or foreign-owned factories exclusively for North American markets.
As seen in figure 2, the US relies on Canada for wood products, metals, fuels, food products, and transport equipment. The US sources almost half of its foreign fuel from Canada, undoubtedly a factor in President Trump’s decision to threaten only a 10 percentage point increase in the tariff on Canadian energy imports, including oil and uranium. More than 40 percent of US imports of wood products come from Canada, a dependence noted by the National Association of Home Builders, which also noted that over 70 percent of gypsum and lime are sourced from Mexico. Among all the sectors hit by new import taxes on the US’s North American trading partners, the US auto sector stands out as the most likely to be disrupted because of highly integrated vehicle production chains that span the continent.

Detailed modeling by Warwick McKibbin and Marcus Noland warns of the negative effect of new tariffs on China and USMCA partners, both in terms of lost economic activity and their effect on the US price level, if these tariffs are implemented. Analysis by Clausing and Lovely finds that the cost of these new tariffs to the average American household would be at least $1,200, due to their effect on consumer prices.
Data Disclosure
The data underlying this analysis are available here [zip].
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