From an ice-cream parlour in California to a medical supply business in North Carolina to a T-shirt vendor outside Detroit, US businesses are bracing to take a hit from the taxes President Donald Trump imposed Saturday on imports from Canada, Mexico and China – America’s three biggest trading partners.
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The levies of 25 per cent on Canadian and Mexican and 10 per cent on Chinese goods will take effect on Tuesday. Canadian energy, including oil, natural gas and electricity, will be taxed at a lower 10 per cent rate.
Mexico’s president immediately ordered retaliatory tariffs and Canada’s prime minister said the country would put matching 25 per cent tariffs on up to US$155 billion in US imports.
The Budget Lab at Yale University estimates Trump’s tariffs would cost the average American household US$1,000 to $1,200 in annual purchasing power.
Gregory Daco, chief economist at the tax and consulting firm EY, calculates the tariffs would increase inflation, which was running at a 2.9 per cent annual rate in December, by 0.4 percentage points this year. Daco also projects the US economy, which grew 2.8 per cent last year, would fall by 1.5 per cent this year and 2.1 per cent in 2026 “as higher import costs dampen consumer spending and business investment.’’
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The Penny Ice Creamery in Santa Cruz, California, has had to increase prices of its ice cream, including popular flavours “strawberry pink peppercorn’’ and “chocolate caramel sea salt,’’ repeatedly in recent years as an inflationary surge increased the cost of its supplies.