Here's how Trump's tariffs could cost you and your wallet

Every day, many people in the U.S. eat fruit grown in Mexico, use phones made in China and live in homes built from lumber from Canada.

Now, trade with those three countries has moved into a new era. President Trump has imposed 25 percent tariffs on most goods from Canada and Mexico. The U.S. also imposed a tariff on Canadian energy exports, although at a lower rate of 10 percent.

And Trump raised the tariffs on Chinese goods from 10 percent to 20 percent — leading Beijing to retaliate with additional tariffs of 10 percent to 15 percent on a variety of U.S. agricultural imports.

A tariff is a tax on goods imported from abroad. Despite Trump's claims that his tariffs will be paid by other countries, Americans will be stuck with the higher prices.

An analysis by the nonpartisan Tax Foundation found that the tariffs now imposed on the three countries would amount to an average tax increase of $1,072 per U.S. household.

Here's a deeper look at how the tariffs are likely to affect what Americans pay.

Tariffs on China will sting consumers on a range of items

The U.S. imports a lot from China — and Trump's 20 percent tariff could hit more than $450 billion worth of imports.

The tariffs Trump imposed during his first term were more targeted. This time around, more Americans will feel the impact. Among the imports affected are a whole slew of consumer goods, including footwear, toys, video game consoles and electronics.

U.S. businesses import a large number of components from China, as well as the machinery and equipment they use in their own production processes. So the cost of production in the U.S. will go up too.

The Tax Foundation estimated that the tariffs on Chinese goods will add $329 in costs per U.S. household annually.

And there's no exception for Apple this time, unlike in Trump's first term.

"So iPhones, iPads, tablets, laptops — all of that from Apple would now be hit, which is kind of a big escalation compared to how consumer goods were shielded from most of the first trade war tariffs," Erica York, vice president of federal tax policy at the Tax Foundation, told NPR last month.

Does this mean that Apple will now raise the price of the iPhone by 20 percent due to 20 percent tariffs on goods from China? Not necessarily.

For one thing, importers pay a tariff based on the cost price of the item, not the full retail price. And Apple might try to ramp up its production in other countries like India, or it could decide to eat the cost of the tariffs — especially since competitor Samsung produces many of its phones in South Korea or Vietnam and won't feel the same blow.

But even if Americans don't see an increase in the actual sticker price of an item, there is still pain being inflicted on the U.S. economy.

"It means incomes and returns to shareholders in the U.S. economy are lower instead, because if businesses have to eat those higher costs, it means they have less to pay their workers," says York. "It means they have less to hire and expand employment, or less to invest. So no matter what channel the price impact takes, it's Americans who are hurt by the tariffs."

China responded last month with its own 15% tariffs on American coal and liquefied natural gas and 10% tariffs on crude oil, farm equipment and certain other vehicles. And now it has announced additional tariffs of 10-15% on a variety of U.S. agricultural imports, including chicken, pork, soy and beef, starting next week.

Those countermeasures will hurt Americans' finances too.

The Mexico and Canada tariffs could hurt even more

The new 25 percent tariffs on goods from Canada and Mexico will make a real dent in Americans' wallets.

The tariffs on Mexican imports will cost the average U.S. household $435 per year, according to the Tax Foundation. Tariffs on Canadian imports, meanwhile, will cost the average U.S. household $309 per year.

Here are some of the products from the two countries that could be impacted.

Fresh produce

In 2021, Mexico provided almost two-thirds of U.S. vegetable imports and about half of U.S. fruit and tree nut imports, according to the U.S. Agriculture Department.

Tariffs mean prices for those groceries and many more will rise — including for imported tomatoes, raspberries, bell peppers and strawberries, given that Mexico is the leading supplier of each of them.

And then there are avocados: 90 percent of avocados consumed in the U.S. come from Mexico, so expect to pay more for them and for guacamole.

It's also winter, when more of the produce consumed in the U.S. comes from Mexico. Tomatoes are a crop that the U.S. produces a lot of in the summer but not so much in the winter. So your imported tomato would cost more too.

Cars and gas prices

North American car production is highly integrated among the U.S., Mexico and Canada. Parts go back and forth between the countries throughout the production process.

As NPR has reported, the tariffs are likely to raise costs on vehicles like the Toyota Tacoma, which is imported from Mexico, and the Chrysler Pacifica, which is imported from Canada. Cars assembled in the U.S. would also see their prices rise, as many of their parts are sourced from companies in Canada or Mexico.

Analysts at investment bank Jefferies estimate that the proposed tariffs on Mexico, Canada and China would add about 6 percent, or $2,700, to the average U.S. vehicle price.

In a likely nod to the sensitivity of gas prices for Americans, Trump announced a lower tariff of 10% for Canadian energy products.

These tariffs may cause higher prices at the pump. In the Midwest and Mountain West, "100 percent of imports going into those two areas come from Canada," says Scott Lincicome, vice president of general economics and trade at the Cato Institute. And American refineries are mainly set up to use the heavier oil that comes from Canada and can't easily switch to the lighter oil that's mainly produced in the United States.

He predicted a hike of 10 or 20 cents a gallon under a 10 percent tariff on Canadian crude.

Construction materials

The U.S. is struggling with a housing shortage, and new housing is expensive to build. Tariffs on building materials will make homebuilding even more expensive.

The National Association of Home Builders warned that over 70% of the imports of two essential building materials, softwood lumber and gypsum (used in drywall), come from Canada and Mexico, respectively.

"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," NAHB Chairman Carl Harris said in statement.

But U.S. reliance on Canadian lumber has declined in recent years due to a combination of fires, beetle infestation and tariffs, says Lincicome, which could mute some of the price effects. There's already a 14.54% tariff on Canadian softwood lumber.

The U.S. softwood lumber industry argues that the U.S. has the capacity to supply 95% of last year's domestic lumber consumption.

Higher prices will be hard to avoid

No matter what, for consumers, the costs of tariffs will be hard to dodge for as long as they last.

York from the Tax Foundation said last month that she bought an extra bag of avocados to put in the fridge and some frozen berries. "If you're going to buy a car, maybe think about doing that," she says.

But Lincicome says simply that there's not much you can do. He says "buying American" won't help much because American producers will raise their prices to nearly match their competitors.

And trying to get ahead of the game can cause its own problems, says Lincicome, pointing to the run on toilet paper during the COVID-19 pandemic.

"We make most of our toilet paper here, but because everybody freaked out, went out and bought it," says Lincicome. "If you start getting really nervous and start stockpiling goods and a lot of other people do that too, you can actually create high prices and shortages where there isn't even a tariff effect. So I wouldn't really recommend doing that."

Ultimately, if the tariffs go into effect and remain in place, it's simply a higher tax burden for Americans that makes us poorer, says York. "There's no winning a trade war."

Copyright 2025, NPR

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