President Donald Trump has . It’s a move that could affect trillions of dollars in trade and reshape prices for everything from cars to medication — while potentially .
Imported goods are a key driver of the American economy, — with China, Canada and Mexico accounting for over 40% of that volume.
It’s these top trading partners that , threatening a 10% tariff on goods from China and 25% tariffs on goods from Mexico and Canada.
The , meaning it imports more goods than it exports. Tariffs could help close that gap by raising the prices of foreign goods and encouraging Americans to purchase domestic alternatives. In some cases, even the threat of tariffs might accomplish some of that by incentivizing manufacturers to move operations elsewhere. However, those operations won’t necessarily be relocated to the United States.
China was long the biggest exporter of goods to America. But its export total began to fall after Trump levied tariffs on the country during his first term, when . As a result, Mexico surpassed it for total exports in 2023.
as affected companies pass their new costs along. One economic study concluded that the costs of Trump’s 2018 trade war were “.” A 2019 report from the Federal Reserve concluded .
Among all categories of goods, the most-imported in the U.S. are machinery-related products, electronics and automotive products. Canada, China and Mexico account for a meaningful share of these imports, on everything from new cars to smartphones to .
While tariffs will increase the price of consumer goods, with the new tariff revenue.
If that’s the case, it could ease consumer pain in the face of and rising prices on essentials including and milk. However, income taxes make up most of the trillions in revenue the government collected last year.
On the other hand, customs duties, aka tariffs — while still a significant sum — represent a slight fraction of federal revenue.
