How Will the Trump Tariffs Affect YOU?

Today, we hit zero-hour. After months of threats, negotiations, speculation, and consternation, President Trump’s tariffs on China, Canada, and Mexico are going into effect. 

How will they affect you?

We’re about to find out… 

Trump Tariff Effects

To start, Canada and Mexico are being hit with 25% tariffs, while China is getting an additional 10% tax. Trump already slapped China with a 10% tariff last month, so now it’s poised to double to 20% in total.

Now, if anyone needs a refresher on how tariffs work, it’s pretty simple. The tariff is a tax levied on foreign goods being imported to the United States. That tax is paid not by the foreign entity but by the importer. 

Some of America’s biggest importers include:

• Walmart
• Target
• The Home Depot
• Lowe's Companies Inc.
• Dole Food Company Inc.
• Samsung America Inc.
• Chiquita Fresh North America LLC
• And Ikea

These companies will have to pay Trump’s tariffs whenever they import overseas products to sell in the United States.

Obviously, they’re not going to eat the added cost themselves; they’ll pass the added expense (or at least a portion of it) onto the American consumer through higher retail prices. 

Thus, foreign goods on U.S. shelves suddenly get more expensive. Meanwhile, domestic producers gain leverage because their products can be sold for less. 

However, they could also raise prices to expand their margins. For example, a U.S. company could theoretically raise the price of, say, a TV by 10% — and it might still cost less than a Chinese made TV sporting a 20% tariff.

Scrupleless retailers could do the same, raising prices on goods across the board to improve margins while pinning the higher costs on tariffs.

In any case, U.S. consumers will be asked to pay more for goods. 

How much more depends on what you buy. 

However, an analysis by the nonpartisan Tax Foundation found that Trump’s tariffs would cost the average American household $800 this year.

The United States imported $439 billion worth of goods from China last year. A 20% tax on that volume of goods will total approximately $90 billion in added costs.

Meanwhile, the United States imported roughly $900 billion worth of goods from Canada and Mexico last year, which would translate into about $225 billion in added costs from Trump’s tariffs.

As the world’s manufacturing floor, China produces a huge amount of consumer goods — clothing, shoes, toys, electronics, appliances, etc. 

In another wrinkle, Trump exempted Apple from tariffs in his first term, but that’s not the case today. That means ever-popular iPhones, iPads, tablets, and laptops will be hit, as well.

From Canada we get more minerals, fuel, lubricants, and chemicals. That could mean higher prices for oil and gas.

Meanwhile, Mexico provides an outsized volume of machinery, cars, and trucks. Indeed, many American auto manufacturers build their cars in Mexico to save on costs and then import them here. 

That’s why autos figure to be one of the hardest-hit segments. 

The cost to build a crossover utility vehicle will rise by at least $4,000, according to a new study from Anderson Economic Group. And the cost of an electric vehicle could surge as much as $12,000 per unit.

A separate analysis from investment bank Jefferies estimates that the tariffs will add about 6%, or $2,700, to the average U.S. vehicle price.

Of course, as you’ve probably noticed, car and truck prices have already soared 20% in the past five years to almost $50,000 on average today. 

Companie could also sunset some models if their production becomes too expensive to maintain or costs prove too high to be effectively passed on to consumers.

Again, a lot of this could be avoided by simply steering clear of big-ticket purchases. But it’s going to be harder to avoid higher costs for food and clothing. 

Almost two-thirds of U.S. vegetable imports and about half of our fruit and tree nut imports come from Mexico. Indeed, the country is a leading supplier of tomatoes, raspberries, bell peppers, and strawberries.

Higher costs for imported aluminum, for example, will drive up the costs of canned goods. 

Of course, it isn’t all bad.  

We’ve taken the liberty of preparing a special investing report on how investors can actually profit from these tariff charges. They could more than offset any added costs consumers end up enduring as a result of Trump’s tariff campaign.

Check that out here if you haven’t already.