American consumers would bear the brunt of Donald Trump’s proposed tariffs, new analysis showed on Tuesday night as the world braced for a new era of U.S. protectionist policies.
It comes as the president-elect makes fresh threats steering the U.S. toward a potential trade war with adversaries and allies alike.
Trump sent shockwaves through the global markets on Monday when he posted he would slap 25 percent tariffs on all products from Mexico and Canada if they didn’t stem the flow of migrants and drugs across the southern and northern U.S. borders.
He also threatened additional 10 percent tariffs on China if they do not meet his demands.
The targeted nations – the three biggest trading partners of the United States – responded by warning they would retaliate with their own tariffs on goods.
Mexican President Claudia Sheinbaum made it clear that she was prepared to hit back at Trump and Canada’s Justin Trudeau vowed to work with the incoming president to find a solution.
Liu Pengyu, a spokesperson for the Chinese embassy in Washington, slammed claims that Beijing is knowingly allowing fentanyl to flow into the United States.
Retail experts also revealed that Trump’s stringent policies would also, eventually, impact shoppers with higher prices for cars, gas, smartphones and appliances.
Donald Trump’s proposed tariffs on goods from Canada (Prime Minister Justin Trudeau pictured), Mexico and China sparked threats of retaliation from around the world on Tuesday
More than $1.3 trillion-worth of goods were imported in to America from the three countries last year, according to US Census Bureau data.
Meanwhile Trump’s campaign team signed papers with President Joe Biden’s White House staff to formally kickstart the transition into his second term.
The move against the United States’ three largest trading partners sparked fluctuations in the market and left the world guessing as to whether the threats were a negotiating tactic from the president-elect.
However, U.S. stock markets subsequently pushed to fresh records Tuesday, shrugging off the tariff threats.
Both the Dow and S&P 500 notched all-time highs, with many investors regarding the incoming president’s words as a bargaining chip.
‘In theory, higher tariffs should not be good news for stocks. But, you know, I think the market’s chosen to think of (it) as a negotiating tactic,’ said Steve Sosnick of Interactive Brokers.
Despite that Mexico’s Sheinbaum warned of dire economic consequences for the U.S. and Mexico, including job losses, as she suggested possible retaliation in kind.
‘One tariff will follow another in response and so on, until we put our common businesses at risk,’ Sheinbaum said in a letter to Trump, which she read aloud in a press conference.
Justin Trudeau, the Canadian prime minister, said he would work with Trump.
He said: ‘This is a relationship that we know takes a certain amount of working on, and that’s what we’ll do. One of the really important things is that we be all pulling together on this.’
The tariffs suggested by Trump could cost every American consumer as much as an additional $810 a year, according to ING chief international economist James Knightley.
But even before the president-elect made his latest threats, his proposed tariffs from the campaign trail would cost U.S. consumers up to $2,400, ING found.
In all, that would amount to up to $3,200 a year,
Their analysis before Trump’s latest threats looked at Trump’s sweeping plan to impose new tariffs including 60 percent tariffs on Chinese imports and 10 to 20 percent tariffs on other countries he promised on the campaign trail in an effort to promote and protect American production.
The research also found the new tariffs could increase inflation at a time where prices are already up for Americans across the country.
‘This potential increase in consumer costs and inflation could have widespread economic implications, particularly in an economy where consumer spending accounts for 70 percent of all activity,’ researchers wrote.
Additional tariffs now being proposed by Trump could make the situation for consumers even more painful as the increased costs are past down the supply chain.
Mexican President Claudia Sheinbaum made it clear that she was prepared to hit back at Trump
Trump sent shockwaves through the global markets on Monday when he posted he would slap 25 percent tariffs on all products from Mexico and Canada if they didn’t stem the flow of migrants and drugs across the southern and northern U.S. borders
The cost of imposing Trump’s 25 percent tariffs on Canada and Mexico would mean an estimated additional $680 per American, Knightley told DailyMail.com.
He based his estimates on $896 billion in goods the U.S. imported from Canada and Mexico last year without substitution for American made products.
Adding additional 10 percent tariffs on all Chinese products on top of Monday’s threat of against Canada and Mexico could bring that new cost to as much as $810 for a grand total upwards of $3,200.
Knightley noted the $810 figure is a worst case scenario where there are not substitutions for purely U.S. made products to replace the foreign made goods.
He also said a stronger dollar may help mitigate at least some of the impact but it would still lead to some higher prices.
‘That is going to be more painful for lower income households who spend a greater proportion of their income on physical products, Knightley said.
He noted it would have a lesser impact on higher income households ‘who spend a greater proportion of their income on services and “experiences” such as travel, which are not subject to tariffs.’
The new estimates come after Trump posted on social media taking aim at Mexico, Canada and China.
He claimed he would impose the new tariffs on Mexico and Canada through an executive order on his first day in office on January 20 until the time when ‘Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!’
In his separate post threatening China, Trump said the additional 10 percent tariffs would be imposed on all products until China stops drugs like Fentanyl from being sent to the U.S.
Shoppers head back to the US-Mexico border with their purchases in San Ysidro, California
Trump is with aides in Mar-a-Lago shaping his second administration and is preparing for Thanksgiving
The border wall is seen in the distance as shoppers walk with their purchases at Plaza Las Americas Mall near the US-Mexico border in San Ysidro, California
ING found even before Trump’s latest tariff threat, his past proposals coupled with constraints resulting from his proposed immigration policies could lead to a one percentage point increase to inflation.
Mexico is the US’s biggest trading partner, with $475 billion in goods being imported from the country last year, The Washington Post reported.
The majority of these imports were manufactured items such as cars, computers and household appliances, which could go up in price under the proposed tariffs.
A tariff with Canada as America’s second largest trading partner would also have widespread impacts.
The US imported more than $418 billion in goods, including crude oil and machinery such as turbines and engines, from Canada last year alone.
The US also imports billions in plastics, pharmaceuticals, metals and agricultural products from their northern neighbor every year.
