President-elect D.J. Trump has vowed to impose tariffs on goods imported from Mexico and Canada of 25% with an additional 10% on China. These are our top 3 trading partners. The U.S. has imported goods valued at $1.132 trillion from these 3 countries. A back-of-the-envelope calculation is that would amount to $319.3 billion in revenue for the U.S government on these imported goods. You can see why Don loves tariffs, because he can tax us and point to the “real” enemy, the other countries. He has even declared “tariff” to be his “favorite word” and “the most beautiful word in the dictionary.”
Most economists agree, most of these costs would be passed through to the consumer. This is especially true for perishable food products, with low profit margins too low to absorb price increases, that make of a large portion of the Mexican imports.
If Don applies these tariffs on Day One, the first impact will be guacamole served at most Super Bowl parties, made with avocados from Mexico ($3 billion, 946,503 metric tons, in 2022).
Don keeps changing his plans, but PIIE calculated “imposing a 20 percent across-the-board tariff combined with a 60 percent tariff on China would cost a typical US household in the middle of the income distribution more than $2,600 a year.”
Thanks Donald for taxing us more!