Three countries are striking back against the United States after President Trump imposed tariffs on imports from Mexico, Canada and China. Economists warn the tariffs and in-turn, retaliatory moves from these North American neighbors , could ignite a trade war and hit the wallets of everyday Americans.
The Trump administration said tariffs are aimed at curbing the flow of drugs and undocumented immigrants into the US, but they potentially risk substantial price increases for American consumers across an array of common goods.
Other WRAL Top Stories
For years families at local grocery stores have been paying more because of inflation.
"We were lied to. We’re going to see prices raised. I just bought double the amount of coffee than I normally would," said Teresa McLean who was shopping at a grocery store in the Village District Sunday.
She said she's concerned promises made on the campaign trail regarding a better cost of living and economy for Americans will not be happening anytime soon. She's bracing for higher price tags.
"I have an elderly mother that is on a fixed income. I am a single person that’s on a regular income and that does concern me," she added. "I think that it is going to have a trickle down effect, and I think folks should get prepared for it."
Trump's order on the tariffs will amount to a significant 25% duty on all imports from Mexico and most goods from Canada, and a 10% tariff on Chinese goods imported into the United States.
The tariffs will have no exemptions, and the executive action Trump signed Saturday will close the so-called de minimis loophole that had allowed shipments of $800 or less to come into the United States tax-free.
"Normally, I think [tariffs] it’s for nations we have trouble dealing with and like I can understand perhaps with China that they want to change China’s behavior in terms of fairness and manufacturing and utilizing computer chips and things like that," said Andy Bandklyader, a shopper at Harris Teeter in Raleigh.
'It's essentially US companies that are paying that tariff'
Gas, fresh produce and consumer electronics are some of the top goods the U.S. imports from these countries.
You can track grocery prices and see which stores have the best deals with WRAL's Grocery Tracker.
NC State economist Mike Walden said there are estimates that the overall inflation rate in the country could go up to somewhere between 3% and 4% on an annual basis.
"He's talked about how this money could maybe offset some of the tax cuts he wants to push, but the point is that it's essentially U.S. companies that are paying that tariff," Walden explained.
Collectively, these three countries accounted for 42% of the nearly $3 trillion worth of goods the U.S. imported worldwide last year.
NC economist says Trump's tariffs are about auto industry
In North Carolina, the auto parts producing industry could get hit especially hard.
Walden said Mexico and Canada are our biggest trading partners, and he believes the tariffs have to do with the auto industry.
"When the North American Free Trade Agreement was passed...it was superseded by the Mexico, Canada, U.S. agreement," he said. "We essentially said the three countries were going to manufacture or assemble vehicles in the lowest cost country, which is usually Mexico, and the U.S. and Canada will be making the parts, making the technology, etc.
"That was the notion. And the idea was that consumers would benefit, because we were taking advantage of what each country could supply at the lowest cost."
Walden said he believes President Trump is trying to change that model so that the U.S. can have more control of vehicle production.
"So I think that's one thing behind this," he said. "Another thing supposedly behind this is that he wants Mexico and Canada to do more about stopping immigration; he wants them to do more about stopping the flow of the fentanyl. But I think mainly this has to do with the auto industry.
"I think he is very laser focused on manufacturing," Walden added. "So I think he is using this as one tool to try to bring the manufacturing, particularly from Mexico, back to the U.S."
Walden said that also includes assembly plants.
"We don't yet have an up and functioning auto assembly plant. That's what VinFast is designed to do eventually. But that would mean that those auto parts that we make, that a lot of which go to Mexico for assembly, would have a tax on it," he said.
"I certainly understand the desire on part of the administration potentially to have more manufacturing done in the U.S., but this is sticky when you have a system right now that is giving us, in many cases, lower priced products."
Bandklyader, who recently moved to Raleigh from Miami, also expressed concerns about the future of the auto parts industry.
"It could affect automobiles also because I know in Mexico, even a lot of US companies produce their vehicles in Mexico so if 10, 20 or 30% tariffs go on 20-$30,000 vehicles, that’s a lot of money for an average American," he said.
The Trump administration released a statement on Sunday, stating the tariffs are a necessary solution. On his social media platform he wrote,
"THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!), BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID."
Trump administration officials said the tariffs were designed to stop the flow of fentanyl and undocumented immigrants. To put the tariffs in place, Trump in his executive action declared a national economic emergency, invoking the International Emergency Economic Powers Act, known as "IEEPA," which authorizes a president to unilaterally manage imports during a national emergency. The tariffs are set to go into effect Tuesday at 12:01 am ET.
"I'm sure these countries would be happy to work with us in relation to illegal immigration problems as well as the fentanyl that’s coming across the border. So I would hope that we could work with them as partners rather than as adversaries," Bandklayder added.
A Trump administration official said any retaliation from Mexico, China or Canada would likely result in even higher tariffs for that country.