Trump tariffs on Mexico would likely mean Americans paying more for cars, avocados

Experts say prices on automobiles could increase 6%.

May 31, 2019, 6:02 PM

From cars to avocados, the biggest hit from President Donald Trump’s threatened tariffs on imports from Mexico would likely be on American consumers' wallets.

The tariffs are expected to start at 5% beginning June 10 and could end up going as high as 25% by October, according to the White House.

“These tariffs, unlike previous tariffs that we’ve seen, where they’re targeted maybe at particular imports, these are broad based,” said Neil Bradley, the executive vice president for the pro-business U.S. Chamber of Commerce.

“It’s everything that the United States imports from Mexico and so, in that respect, the harm both to businesses and consumers is going to be really broad based. And as they escalate, significant,” he said.

The administration on Thursday announced sweeping tariffs in what Trump described as an effort to force Mexico to curb illegal immigration and drug trafficking across its border with the U.S. Instead, Bradley said, the tariffs will raise the price of various everyday items for U.S. consumers.

"The White House is right, there’s a real problem at the southern border. Unfortunately, tariffs won’t do anything to solve that problem and what we don’t want to do is see self-inflicted pain on American families and our economy when that pain won’t do anything to solve that very real problem," Bradley said.

Bradley confirmed that the Chamber was “exploring” all of its options in response to the administration’s announcement, including potential legal action and what could be done legislatively.

Senior research fellow Sherman Robinson at the Peterson Institute for International Economics said there will be many products that could see price increases.

“In terms of where they hit, the first one everybody understands is guacamole’s going to be more expensive,” Robinson said.

Some other goods that Robinson noted that could be affected include beer, parts for air conditioners and refrigerators, and medical, surgical and dental instruments.

But the industry that will most likely see the biggest effect, Robinson said, is the auto industry, calling the North American auto industry “incredibly integrated.”

“The really big one will be the motor vehicle industry in North America,” Robinson said. “That’s probably the largest single traded good across North America.”

He later added: “Having us withdraw from global trade is not going to help automobile workers, it’s going to just damage the automobile industry.”

Senior economist at Wells Fargo Securities Mark Vitnern said he estimated that “car and light truck prices would rise 4% to 6% if tariffs were increased to 25% and remained there for several months.”

“Imports of Mexican-made vehicles account for around 15% of U.S. sales. Prices for other vehicles – made in the US and elsewhere - would also rise,” he said in an email.

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