Possible Impact on Domestic Market from Trump’s Tariffs on Avocados and Automobiles from Canada and Mexico

WASHINGTON – President Donald Trump is considering imposing tariffs on imports from Canada and Mexico, which could lead to price increases across various products like gasoline, pickup trucks, and even Super Bowl guacamole dip.

These tariffs could potentially disrupt the trade agreement that Trump negotiated with America’s neighbors during his first term, known as the U.S.-Mexico-Canada Agreement. Trump had previously hailed this agreement as the most fair, balanced, and beneficial trade deal ever established, aiming to bring stability to North American trade and encourage business investments.

Here are just a few of the imported goods that could be hit first.

A “GRENADE’’ LOBBED INTO AUTO PRODUCTION

Over the years, automobile manufacturers have established supply chains that span the borders of the United States, Mexico, and Canada. A significant portion of vehicles sold in the U.S. are manufactured in Canada and Mexico, with statistics from S&P Global Mobility showing that more than one in five cars and light trucks originate from these countries. In 2023 alone, the U.S. imported $69 billion worth of vehicles from Mexico, the highest import value from any country, and $37 billion from Canada. Additionally, $78 billion in auto parts were sourced from Mexico, along with $20 billion from Canada. Notably, engines for popular models like the Ford F-series pickups and the Mustang sports coupe are supplied by Canada.

“You have engines and car seats and other things that cross the border multiple times before going into a finished vehicle,’’ said Cato’s Lincicome. “You have American parts going to Mexico to be put into vehicles that are then shipped back to the United States.

“You throw 25% tariffs into all that, and it’s just a grenade.’’

In a report Tuesday, S&P Global Mobility reckoned that “importers are likely to pass most, if not all, of this (cost) increase to consumers.’’ TD Economics notes that average U.S. car prices could rise by around $3,000 – this at a time when the average new car already goes for $50,000 and the average used car for $26,000, according to Kelley Blue Book.

HIGHER PRICES AT THE PUMP

Canada is by far America’s biggest foreign supplier of crude oil. From January through November last year, Canada shipped the U.S. $90 billion worth of crude, well ahead of No. 2 Mexico at $11 billion.

For many U.S. refineries, there’s not much choice. Canada produces the “type of crude oil that American refineries are geared to process,’’ Lincicome said. “It’s a heavier crude. All the fracking and all the oil and gas we make here in the United States – or most of it – is a lighter crude that a lot of American refineries don’t process, particularly in the Midwest.’’

Trump said Thursday that he hasn’t yet decided whether to include Canadian and Mexico oil in the tariffs he still plans impose Saturday.

If he did tax Canadian oil imports, Lincicome said, “how the heck does that shake out? My guess is that it shakes out just through higher gas prices, particularly in the Midwest.’’ TD Economics figures that Trump’s tariffs could push up U.S. gasoline prices by 30 cents to 70 cents a gallon.

EXPENSIVE AVOCADOS – JUST IN TIME FOR THE SUPER BOWL

For American consumers still exasperated by high grocery prices, a trade war with Canada and Mexico could be painful. In 2023, the U.S. bought more than $45 billion in agricultural products from Mexico –including 63% of imported vegetables and 47% of fruits and nuts. Farm imports from Canada came to $40 billion. A 25% tariff could push prices up.

“Grocery stores operate on really tiny margins,’’ Lincicome said. “They can’t eat the tariffs … especially when you talk about things like avocados that basically all of them – 90% — come from Mexico. You’re talking abut guacamole tariffs right before the Super Bowl.’’

U.S. farmers are nervous, too, that Canada and Mexico will retaliate by slapping tariffs on American products such as soybeans and corn. That’s what happened in the first Trump administration. China and other targets of Trump tariffs hit back by targeting the president’s supporters in rural America. Exports of soybeans and other farm products dropped, so Trump spent billions of U.S. taxpayer money to reimburse farmers for lost sales.

“President Trump was as good as his word,’’ said Mark McHargue, a Central City, Nebraska, farmer who grows corn, soybeans, popcorn and raises hogs. “It did take the sting out of it. That’s for sure.’’ But he would prefer to see the government push to open foreign markets to American farm exports. “We would rather get our money from the market,’’ said McHargue, president of the Nebraska Farm Bureau. “It doesn’t feel great to get a government check.’’

____

Associated Press Writer Josh Boak in Washington contributed this story.