President Donald Trump’s new tariffs on Canada and Mexico have set the stage for a potential trade showdown, with both nations vowing to strike back. As of Tuesday, a 25% tax hits goods flowing into the U.S. from its northern and southern neighbors, threatening the tight-knit economic ties that move roughly $2 billion (£1.6 billion) in manufactured products across their borders daily.
Trump frames the tariffs as a shield for American industries, but economists caution that U.S. consumers might feel the pinch. The levies fall on American importers, who could either hike prices for buyers or cut back on stock, tightening supply. Here’s a look at six things that could cost more:
1. Vehicles
Expect sticker shock at car dealerships—prices could jump by about $3,000, per TD Economics. Auto parts crisscross the U.S., Canada, and Mexico multiple times during production, involving brands like Ford, Honda, and BMW. Higher import taxes on those parts will likely trickle down to buyers. Economist Andrew Foran of TD Economics warns that upending decades of seamless trade in the auto sector “comes with a hefty price tag,” noting free trade has kept costs down for years.
2. Beer, Whiskey, and Tequila
Mexican favorites like Modelo and Corona, alongside tequila, could see price hikes if U.S. importers pass on the 25% tariff burden. Modelo, America’s top beer since 2023, might also face reduced shipments instead. Spirits are trickier—Bourbon, Canadian whisky, and tequila can only be made in their home countries, say industry groups from all three nations, who fear supply squeezes and costlier bottles. Cross-border ownership of brands adds another wrinkle.
3. Housing
Softwood lumber, with a third of U.S. supply hailing from Canada, faces the 25% tariff wallop. The National Association of Home Builders is pleading for an exemption, arguing it’ll jack up construction costs and stall new home projects—most U.S. homes rely on wood frames. “Buyers will foot the bill with pricier houses,” the group warns. Trump’s March 1 call for a broader lumber tariff probe, due to wrap up by year-end, could widen the impact beyond Canada.
4. Maple Syrup
Canada’s maple syrup, dominating 75% of global output—90% from Quebec—could sweeten your grocery bill, says London School of Economics’ Thomas Sampson. With Quebec hosting the world’s only strategic syrup reserve, this pantry staple’s price is poised to climb. “Even U.S.-made goods using Canadian inputs will cost more,” Sampson adds.
5. Gasoline
Canada pumps 61% of America’s imported crude oil, per last year’s trade data, and though its energy gets a lighter 10% tariff, trouble looms. U.S. refineries crave Canada’s thick crude for gas, diesel, and jet fuel, notes the American Fuel and Petrochemical Manufacturers. If Canada retaliates by curbing exports, fuel prices could surge at the pump.
6. Avocados
Avocados, nearly 90% of which come from Mexico’s ideal climate, might guac your wallet harder. The U.S. Agriculture Department predicts tariffs could spike costs for the fruit and dishes like guacamole, adding pressure to household budgets already stretched by rising grocery bills.
As Canada and Mexico gear up for counter-tariffs, the ripple effects could deepen, leaving Americans to navigate a pricier landscape for these everyday essentials.