Will Trump's tariffs plan raise gas prices, electronics, and other needs?
Experts said over time, Trump's tariffs could raise crude oil prices.
President-elect Donald Trump has issued stark warnings to some U.S. trade partners, threatening to impose substantial tariffs on imported goods. Trump's aggressive stance has sparked some backlash and fueled consumer anxiety, fearing that such tariffs could increase everyday product prices nationwide.
The president-elect said he plans to impose new tariffs on Mexico, Canada, and China immediately upon taking office. He announced on Monday his intention to implement a 25% tax on all products entering the U.S. from Canada and Mexico. He would add an additional 10% tariff on goods from China.
Trump claims that foreign countries pay tariffs, but it's U.S. importers who actually cover these costs. The money goes to the U.S. Treasury, and these companies usually raise prices for customers to offset the higher expenses.
Trump believes tariffs will help the economy by forcing more products to be made in America, adding manufacturing jobs, and increasing American innovation.
His objective is to compel these countries to modify policies that he claims are detrimental to the U.S.
"That's the hope. It's certainly the intention but it doesn't always work out that way," ABC News' Alexis Christoforous said Tuesday.
Christoforous examines the potential economic effects of Trump's proposed tariffs on Mexico, Canada and China.
"Canada's largest export to the U.S. is crude oil," Christoforous said. "About 160 billion dollars in 2022 alone. This can have a huge impact on Canada's economy. Canada is saying we want to continue to talk to the incoming administration. The hope here, of course, is that they renegotiate terms so that the tariffs are never put in place."
However, American consumers source crude oil from various countries, including Saudi Arabia, Mexico, Iraq, and Brazil. The U.S. also has a healthy amount of crude oil inventory, which will take some time to deplete.
When the current stockpile of crude oil decreases over time, Americans can expect importers to pay higher prices. This increase may result in consumers facing higher costs for everyday necessities, such as gasoline.
"If these tariffs are in place importers, must then pay a higher price," Christoforous said. " They could then pass that cost onto consumers. We know crude oil is a big component, about 60% of what makes up gasoline. So over time, we can see higher gas prices."
Despite importing less from China than it did eight years ago, the U.S. continues to import hundreds of billions of electronics from China every year, according to the U.S. Bureau of Industry and Security.
Many U.S. manufacturers source parts from China for their products. Tariffs may lead Chinese importers to incur higher costs, which they will likely pass on to American buyers. As a result, prices are expected to rise for American consumers.
"So you are looking at imports coming in not only from China but from Mexico, where we get a lot of our car parts," Christoforous said. "Those items over time, which will take some time, a slow crawl, but those prices could move up."