Canada accounts for roughly 70 per cent of global production and, in 2023, more than 60 per cent of the country’s maple exports went to the US, according to data from the Canadian government.
This added burden comes as many Americans have already been experiencing sticker shock at their local supermarkets. Data from the Labour Department showed that, in December, grocery prices — which were relatively flat in late 2023 and early 2024 — rose again, led by the price of eggs.
Could car prices increase, too?
Yes, the tariffs are widely expected to raise the prices that US consumers pay for new vehicles. That’s because car makers ship tens of billions of dollars worth of finished vehicles, engines, transmissions and other components each week across the US borders with Canada and Mexico. Billions of dollars more are imported from parts manufacturers in China.
New cars and trucks are already selling for near record prices. Trump’s tariffs could add to the challenges for consumers looking to buy one.
Car prices are to set rise. GMC Hummer electric vehicles on the production line at General Motors’ assembly plant in Detroit, Michigan. Credit: Bloomberg
General Motors, the largest US car maker, will probably feel the impact of the tariffs more acutely than other car makers. GM plants in Canada and Mexico produced nearly 40 per cent of all vehicles the company made last year in North America.
But compared with food, how tariffs affect car prices will probably be more varied, Miller said. Vehicles assembled in states including Michigan, Ohio, Kentucky and Indiana tend to rely heavily on car parts imported from Canada, he said, which is not the case across the board.
“There’s just a lot more complexity to understanding increases in prices that consumers could eventually see,” Miller said.
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What other products might be affected?
US drivers, particularly in the Midwest, may see higher prices at the bowser. Trump’s 10 per cent tariff on Canadian energy is not as steep as he initially indicated it would be, and it’s lower than tariffs on other Canadian goods. But the tax nevertheless threatens to disrupt the US oil and gas industry, which is highly dependent on Canadian oil. Roughly 60 per cent of the oil that the US imports comes from Canada.
Analysts expect the additional costs to be borne by a combination of oil producers in Canada and Mexico, US refineries and American consumers. How the tariffs ripple through the market will depend in part on how long they remain in place.
Consumer electronics – among the top goods imported into the US from China last year – could also get more expensive. Shoppers could see prices of goods from mobile phones and computers to video games start to rise within a couple of months.
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Another product likely to be affected is lumber, about 30 per cent of which is imported from Canada. Tariffs on softwood lumber could raise the cost of building houses, which risks worsening the housing affordability crisis that is already weighing on millions of US families. More than 70 per cent of the imports of two essential materials that home builders rely on – softwood lumber and gypsum, which is used for drywall – come from Canada and Mexico, according to the National Association of Home Builders.
“Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices,” Carl Harris, chairman of the association, said in a statement on Saturday.
How quickly could prices go up?
That depends on the product. Consumers could see a swift increase in prices for nondurable goods, including groceries. But it could take longer for prices to rise for durable goods, such as cars, thanks to existing inventory or if companies expect the tariffs to be temporary, said Felix Tintelnot, an associate professor of economics at Duke University.
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How quickly firms are willing and able to raise their prices remains to be seen, Peter Simon, an economics professor at Northeastern University, said on Saturday. While some price increases may represent a legitimate response to rising costs for businesses, there is also the risk of opportunistic pricing, meaning companies may use tariffs as an excuse to raise prices even more than necessary, Simon said.
What about across-the-board inflation?
Analysts at Goldman Sachs have said that if Trump proceeded with across-the-board tariffs, it would both raise prices in the US and slow economic growth. Most economists expect that the fresh trade barriers could lead to a temporary burst of higher inflation.
Inflation has eased back down towards the Federal Reserve’s 2 per cent target after the central bank raised interest rates aggressively in recent years and kept them at high levels. But the Fed remains alert to anything that could stall progress toward that goal – including Trump’s tariffs.
This article originally appeared in The New York Times.
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