Understanding the rationale behind Trump’s decision to impose tariffs on Canada, Mexico, and China – Experts explain the anticipated price hikes

CHICAGO (WLS) — It takes a village to manufacture a car.

For decades, free trade has allowed vehicles to be made with parts from all over the world.

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University of Chicago Political Science Associate Professor Robert Gulotty mentioned that since the 1960s, there has been unrestricted trade in auto parts, leading to the integration of the American manufacturing market spanning from Canada to Mexico.

In addition to auto parts, experts argue that in a global economy, it has been common practice for the United States and other countries to intertwine their manufacturing operations across borders for an extended period.

Finance expert Phillip Braun explained that the rationale behind distributing manufacturing activities worldwide is that each country focuses on producing goods that they can efficiently and cost-effectively manufacture, ultimately reducing costs for all parties involved.

But President Donald Trump says it is time to radically change the way the United States does business.

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While imposing big tariffs on America’s three biggest trading partners, China, Canada and Mexico, will likely result in higher prices on everything from food to electronics, the president argues open trade has cost Americans millions of jobs.

“What they will have to do is build their car plants and, frankly, other things in the United States,” Trump said.

Experts say it will take years to rebuild plants in the U.S. So, why does Trump want to impose tariffs, especially on our two biggest allies, Mexico and Canada?

Gulotty says Trump believes Mexico and Canada owe the United States for their economic success.

“He thinks that because Canada is wealthier than they were 50 years ago, they owe us for that privilege of having become more wealthy over the past 50 years,” Gulotty said.

Gulotty argues free trade between the America’s border countries have done more than keep prices down.

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“We have the longest and most safe border in the world with U.S. and Canada. That’s worth it’s something, and that’s the kind of thing that you can’t buy,” Gulotty said.

While Canada and China have already imposed retaliatory tariffs on the U.S., Mexico has yet to make a move. Its president says she will announce her country’s response on Sunday.

And with the tariffs now in effect, experts say Americans will start to feel the effects.

On Tuesday, the cost of avocados and mushrooms were what Carlos Macias thought it would be at the wholesalers, but that is about to change.

“They warned me that tomorrow would be different. They don’t know the exact quantity, but it will be different starting tomorrow,” Macias said.

Macias owns Carniceria Aguacalientes in Little Village. The second-generation store owner told ABC7 75% of their grocery items and beverages are from Mexico. Macias fears he will have to raise prices, making money even tighter for his customers.

“You don’t know what you are going to wake up to tomorrow. I don’t know how much the cilantro will be tomorrow. This is a very important ingredient for our consumer,” Macias said.

In Evanston, third-generation lumber yard owner Bob Fisher expects to weather this challenging time, but not without eventually passing along cost to builders and homeowners.

“Building in Chicago, it’s going to mean higher prices. There is no question about it,” Fisher said.

Fisher owns Evanston Lumber, where at any given time, 24-45% of his lumber comes from Canada.

“This country does not have the production or the labor to make up for what Canada is producing and shipping. It’s just not there,” Fisher said.

Those ABC7 spoke with hope there will be some negotiations or agreement to ease tariffs, especially for items that cannot be easily produced in the United States.