Warning! Watch for rising prices; tariffs may work but they're expensive

President Trump's tariffs may wind up strengthening the economy over the long term but in the near term, they're almost certain to raise the prices of many consumer products big and small.

Food from Mexico, lumber from Canada and electronics from China are the most obviously vulnerable to price hikes. 

Best Buy said that while it directly imports only a small percentage of its products, increased costs from suppliers will likely be passed along to consumers.

"While Best Buy only directly imports 2% to 3% of our overall assortment, we expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely," said Best Buy CEO Corie Barry in a Wall Street Journal report. 

The tariffs could slow demand for big-ticket electronics such as computers and video game consoles. Retailers, including Best Buy, had been hoping for a boost in PC sales due to overdue upgrades and upcoming product launches, such as Nintendo’s new gaming console and the highly anticipated release of Grand Theft Auto VI by Take-Two Interactive Software.

The new tariffs include a 25% levy on goods imported from Mexico and Canada, which took effect on Tuesday. Both Canada and Mexico have announced retaliatory measures, with Canada imposing 25% tariffs on nearly $100 billion of U.S. imports and Mexico also planning countermeasures.

Additionally, the U.S. introduced an extra 10% tariff on Chinese imports overnight, adding to existing duties. China responded by imposing tariffs on U.S. agricultural goods and targeting American companies with additional restrictions.

Chinese cars blocked

Little noticed in the discussion of tariffs is that they will add to impediments to importing Chinese cars, which have been unavailable in the U.S. for years. The U.S. had earlier imposed substantial tariffs on Chinese-made vehicles. Initially set at 25%, these tariffs were increased to 100% on Chinese electric vehicles in September 2024, making the importation of these vehicles economically unfeasible. ​

Security considerations and safety issues have also kept Chinese cars out of the American market, even though they have been highly successful elsewhere in the world, particularly in Europe. Forecasts suggest that by 2030, Chinese-branded cars could capture a 7% market share in Europe. 

Other affected products

Everything from maple syrup to smartphones are likely to be affected if the tariffs remain in effect. 

Products from Canada:

• Automobiles and parts: Canada is a significant exporter of vehicles and automotive components to the U.S. The tariffs are likely to increase the cost of these imports, potentially raising prices for consumers and impacting the automotive industry's supply chain.​

• Agricultural products: Items such as maple syrup, grains, and other agricultural goods imported from Canada may see price hikes due to the tariffs.​

• Alcoholic beverages: Imports of Canadian whisky and other spirits are subject to the new tariffs, which could lead to higher prices for these products in the U.S. market.​

Products from Mexico:

• Electronics: Mexico is a major supplier of electronics, including televisions, computers, and smartphones. The tariffs are expected to increase the cost of these goods, affecting both retailers and consumers.​

• Produce: A variety of fruits and vegetables, such as avocados, tomatoes, and berries, are imported from Mexico. The tariffs could result in higher prices for these staple items in grocery stores across the U.S.​

• Alcoholic beverages: Tequila and mezcal, popular Mexican spirits, are among the products affected by the tariffs, potentially leading to increased prices for consumers.