Trump’s tariffs will impact what businesses buy — and sell you — worldwide

America is now engaged in a growing trade war with China, Canada, and Mexico as a result of President Donald Trump’s long-threatening tariffs.

Along with an increased 20% tax on Chinese goods, Trump’s 25% tariffs on imports from Canada and Mexico went into effect on Tuesday. All three nations responded by announcing retaliatory actions.

Businesses and consumers will be the most affected, according to experts. Businesses of all sizes will have to pay more for the goods they import from other nations, and they may not have much choice but to raise their own prices. That will probably result in higher prices for consumers on everything from large-ticket items like cars and appliances to more modest, daily purchases like groceries, electronics, and gas.

Important information regarding the tariffs:

China, Mexico, and Canada all announced on Tuesday that they would levy retaliatory taxes on a number of American goods.

China is levying up to 15% tariffs on a variety of important U.S. agricultural exports, such as beef, pork, chicken, and soy. Additionally, it increased by roughly two dozen the number of American businesses that are subject to export controls and other limitations.

Justin Trudeau, the prime minister of Canada, declared that his nation would impose tariffs on over $100 billion worth of American goods over a 21-day period. Claudia Sheinbaum, the president of Mexico, added that her nation will impose retaliatory tariffs of its own on American goods in response. However, she stated that she would not declare specific tariffs, unlike Canada or China.

“All of the economies involved in the tariffs will see a loss in their real GDP (gross domestic product) and increasing consumer prices in general,” said Wendong Zhang, an assistant professor of applied economics and policy at Cornell University.

Canada and Mexico will suffer considerably more than the U.S. because of the U.S. economy’s size and strengthening dollar, Zhang added. For the U.S., the combined tariffs on China, Canada and Mexico could result in about a 0.4% GDP loss, amounting to over $100 billion, he said.

The tariffs may be short-lived if the U.S. economy suffers. But Trump could also impose more tariffs on the European Union, India, computer chips, autos and pharmaceutical drugs. The president has injected a disorienting and unpredictable volatility into the world economy, leaving it off-balance as people wonder what he will do next.

Manufacturing companies and retailers for a wide array of goods will feel the impact.

International trade is critically important to our business and industry,” Best Buy CEO Corie Barry said on an earnings call Tuesday. “The consumer electronics supply chain is highly global, technical and complex. China and Mexico remain the No. 1 and No. 2 sources for products we sell, respectively.”

At Target, sales and profits slipped during the crucial holiday quarter as customers held back on spending, and there will be “meaningful pressure” on the company’s profits in early 2025 because of the tariffs and other costs, CEO Brian Cornell said at the company’s annual investor meeting Tuesday.

Car companies’ supply chains that cross the borders of the U.S., Canada and Mexico could be disrupted — in addition to auto parts that come from China.

Tariffs on China could impact a variety of consumer products, including cellphones, children’s toys and clothing that Americans buy every day.

Some companies have been working to delay or lessen the blow on consumers by stockpiling what they can or shifting manufacturing and suppliers back to the U.S. — or other countries not impacted by the new levies.

Still, it’s easier to stock up on some goods than others. And even some “made-in-USA” products may contain plastics or packaging from China, for example. Wider supply chain shifts are also complicated and far from easy to carry out.

When it comes to consumer electronics, “We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely,” Best Buy’s Corie Barry said.

And with the U.S. spending billions on fruits and vegetables imported from Mexico and Canada each year, shoppers could face additional sticker shock in the grocery aisle. The new tariffs could also hike prices of tequila, mezcal, whiskey and other spirits made in those countries.

Tariffs add another “mental calculus” for consumers on top of other price pressures today — such as soaring egg prices due to avian flu, Zhang says. He adds that shoppers will need to watch prices for everyday items more closely.

Exactly when consumers will see prices rise isn’t clear, but perishables will likely get hit first.

Especially during colder months, retailers rely on foreign imports for fresh fruit and vegetables, and long-term storage isn’t an option. Shoppers could start seeing the prices of produce such as avocados, which come from Mexico, go up industrywide as early as in a few days, Target’s Cornell told reporters on Tuesday.

But he added that the extent to which prices will increase depends on how things play out over the next few weeks.

“I think things are unfolding so quickly,” Cornell said. “We will watch this carefully and understand, are these long-term tariffs? Is this a short-term action? How will this unfold over time? I think all of us are speculating, and I think we’re going to listen and learn and make sure that we can control the things we can control. But we don’t want to overreact right now to one day and one headline.”

Associated Press writers Anne D’Innocenzio in New York and Paul Wiseman in Washington, D.C., contributed to this report.