What's at stake if Canada and Mexico tariffs happen
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A large chunk of U.S. imports come from Mexico and Canada, making up nearly 29% of the $2.97 trillion in goods the nation brought in last year.
Why it matters: This isn't necessarily all stuff the U.S. can easily produce on its own.
State of play: If President Trump follows through with his pledge to place 25% tariffs on goods from Canada and Mexico, billions of dollars worth of goods, from tomatoes to car parts to lumber, will be affected.
- "We don't need the products that they have," Trump said Thursday.
- Yet prices will likely rise as a result. The Tax Foundation has estimated tariffs on those two countries would be an effective tax of $670 per U.S. household this year.
How it works: Domestic companies that import products pay these tariffs, and they often pass the cost increase on to consumers.
Zoom in: Mexico is the country's largest source of winter fruit and vegetable imports. Last February, U.S. grocery stores imported $2.25 billion worth of fresh produce from Mexico, per federal data analyzed by the Progressive Policy Institute.
- That included 128,330 tons of peppers, 106,460 tons of avocados, and 44,440 tons of lemons and limes.
- "Grocery stores rely very heavily on Mexico for about half (their) fresh produce imports," says Ed Gresser, vice president at the institute.
- "If you wanted to shift that to U.S. production it would be very hard. You'd have to go to a lot of greenhouses and it would be very expensive," adds Gresser, a former assistant U.S. trade representative for policy and economics.
Zoom out: There are also a lot of TV sets, refrigerators and air conditioners that come from Mexico.
- U.S. imports from our southern neighbor have risen as more companies move production out of China, in part to avoid tariffs and diversify supply chains.
Plus, there's lumber from Canada to talk about. About 25% of the lumber used in the U.S. comes from Canada, per federal data from the Forest Resources Association.
- A new 25% tariff would raise total tariffs on Canadian lumber to 39% and would "result in a lumber supply shock."
- Prices would rise at an inconvenient time, as the U.S. looks to rebuild from several natural disasters and address a housing supply shortage.
The bottom line: Households facing higher grocery bills and builders staring down the barrel of higher input costs may disagree with Trump's assessment of the situation.
