How Donald Trump’s tariffs could impact consumers
Donald Trump has long threatened increasing tariffs on goods from Mexico, Canada, and China.
The second-time president argues higher levies will help reduce illegal migration and the smuggling of fentanyl to the US.
On Saturday 1 February the three tariffs came into effect, with Mexican and Canadian goods subject to the full 25% – and Chinese imports to 10%.
Although the Trump administration says the changes will boost domestic production, there will likely be wide-ranging negative consequences for the US consumer.
Economists argue supply chains will be disrupted and businesses will suffer increased costs – leading to an overall rise in prices.
Analysis:
Why has Trump targeted Mexico and Canada?
Both Mexico and Canada rely heavily on their imports and exports, which make up around 70% of their Gross Domestic Products (GDPs), putting them at even greater risk from the new tariffs.
China only relies on trade for 37% of its economy, having made a concerted effort to ramp up domestic production, making it relatively less vulnerable.
Here we look at where US consumers will feel the biggest impact.
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Tariffs to focus on Mexico and Canada
Avocados – and other fruit and veg
The US imports between half and 60% of its fresh produce from Mexico – and 80% of its avocados, according to figures from the US Department of Agriculture.
Canada also supplies a lot of the US’s fruit and vegetables, which are mainly grown in greenhouses on the other side of the US border.
This means that increased tariffs will quickly be passed on to consumers in the form of higher prices.
The US still grows a considerable amount of its own produce, however, so the changes could boost domestic production.
But economists warn that overreliance on domestic goods will see those suppliers increase their prices too.
Petrol and oil prices
Oil and gas prices are likely to be impacted – as Canada provides around 60% of US crude oil imports and Mexico roughly 10%.
According to the US Energy Information Administration, the US received around 4.6 million barrels of oil a day from Canada last year – and 563,000 from Mexico.
Most US oil refineries are designed specifically to process Canadian products, which would make changing supply sources complex and costly.
There has been some speculation that Mr Trump may exempt oil from the new changes – but if he doesn’t, the US could see an increase in fuel prices of up to 50 cents (40p) a gallon, economists have predicted.
Cars and vehicle parts
The US car industry is a delicate mix of foreign and domestic manufacturers.
The supply chain is so complex, car parts and half-finished vehicles can sometimes cross the US-Mexico border several times before they are ready for the showroom.
If this continues, the parts would be taxed every time they move countries, which would lead to an even bigger increase in prices.
To mitigate this, General Motors has said it will try to rush through Mexican and Canadian exports – while brainstorming on how to relocate manufacturing to the US.
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Electronic goods
When Donald Trump imposed a 50% tariff on imported washing machines during his first term in 2018, prices suffered for years afterwards.
China produces a lot of the world’s consumer electronics – and smartphones and computers specifically – so the 10% tariff could have a similar effect on those devices.
The Biden administration tried to legislate to promote domestic production of semiconductors (microchips needed for all smart devices) – but for now, the US is still heavily reliant on China for its personal electronics.
This will mean an increase in prices for consumers unless tech companies can relocate their operations away from Beijing.
Boost for the steel industry
The sector that could feel the most benefit from the Trump tariffs is the steel and aluminium industry.
It has long been lobbying the government to put tariffs on foreign suppliers – claiming they are dominating the market and leaving US factories without enough business and at risk of closure.
Steel imports increasing in price would promote domestic production – and possibly save some of the plants.
But when Mr Trump increased steel tariffs during his first term, prices also increased – which business leaders said forced them to pass on costs and left them struggling to complete construction projects on budget.
Overall inflation
An increase in the prices of all these goods would inevitably lead to widespread overall inflation.
According to analysis by Capital Economics, the Canadian and Mexican tariffs would put inflation above 3% – which is much higher than the Federal Reserve’s target of 2% – and the Chinese levies would see it rise even further.
Donald Trump has responded after Elon Musk said some of his recent social media posts about the US president “went too far”.
The Tesla and SpaceX boss shared a series of posts on his X social media platform last week, including one which described Mr Trump’s sweeping tax and spending bill as a “disgusting abomination”.
He also claimed, in a since-deleted post, that the president appeared in files relating to the disgraced paedophile financier Jeffrey Epstein.
Posting on X this morning, Mr Musk said: “I regret some of my posts about President @realDonaldTrump last week. They went too far.”
In response, the president is quoted as telling the New York Post: “I thought it was very nice that he did that.”
The publication said it spoke to Mr Trump in a brief phone conversation.
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Musk and Trump’s bust-up
The White House dismissed Mr Musk’s Epstein claims at the time, with press secretary Karoline Leavitt saying: “This is an unfortunate episode from Elon, who is unhappy with the One Big Beautiful Bill [a Republican tax and spending bill] because it does not include the policies he wanted.
“The president is focused on passing this historic piece of legislation and making our country great again.”
Mr Musk did not specify which posts he regretted.
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Could the Musk-Trump fallout stall US space goals?
In another post last Thursday, Mr Musk attacked Mr Trump’s tariffs, saying they “will cause a recession in the second half of this year”.
In response, Mr Trump, in an interview with ABC News, said Mr Musk had “lost his mind”. He also threatened to cancel government contracts with the businessman’s companies and said he had asked the billionaire to leave the White House.
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Trump and Musk’s feud explained
But yesterday, Mr Musk’s father Errol Musk told Sky News’ Moscow correspondent Ivor Bennett: “It’s like any argument. Everybody at some point says I’ll never make up, but then they do later.”
He said the argument likely happened because of “emotions welling out of hand”.
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Elon’s dad on the Musk-Trump bust-up
“They’ve had five months of intense day and night, hardly any sleep, and anybody who went through that would know your nerves are pretty much shredded after that time.”
He also said his son had texted him to say: “Don’t worry, we’re sorting it out.”
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The spat hit Tesla shares, which closed down 14.3% last Thursday, losing about $150bn (£111bn) in value.
They’ve since regained much of their value compared to the beginning of the month.
US
Los Angeles protests: Curfew comes into force – as California’s governor steps up his attack on Donald Trump
A curfew has come into force in Los Angeles as officials attempt to “stop the vandalism and stop the looting”.
Mayor Karen Bass said the restrictions will be in force in downtown areas of the city from 8pm to 6am local time (4am to 2pm UK time) – and will likely be repeated in the coming days.
She confirmed that a local emergency had been declared as “we reached a tipping point”, with 23 businesses looted on Monday night.
Ms Bass said “graffiti is everywhere”, with “significant damage” to properties as a result of the protests.
Workers try to remove graffiti after a protest over immigration raids. ICE Pic: AP/Damian Dovarganes
Workers remove graffiti from the Ronald Reagan Federal Building in Santa Ana. Pic: Mindy Schauer/The Orange County Register via AP
A protester marches past businesses being boarded up. Pic: Reuters/Leah Millis
Jim McDonnell, the chief of the Los Angeles Police Department, described the curfew as a “necessary measure to protect lives” as “unlawful and dangerous behaviour” had been escalating in the last few days.
On Tuesday alone, 197 arrests were made by the force, and he warned anyone violating the curfew without a valid reason would be detained.
Residents, people who are homeless, those travelling to and from work, credited media as well as public safety and emergency personnel, will be exempt from the curfew.
The curfew covers a one square mile section of downtown LA that includes the area where protests have happened since Friday. The city of Los Angeles encompasses about 500 square miles.
Workers board up a store in Santa Ana. Pic: AP/Jae C. Hong
California National Guard soldiers stand at a federal agency building. Pic: AP
Protesters are detained by law enforcement near the federal building in downtown LA. Pic: AP/Eric Thayer
The protests are in response to raids carried out by the US Immigration and Customs Enforcement agency (ICE).
US President Donald Trump has activated 4,000 National Guard troops – the federal reserve force – to protect ICE officers carrying out raids as well as federal buildings in LA, despite objections by California Governor Gavin Newsom, who called the deployments unnecessary, illegal and politically motivated.
Mr Trump also sent 700 marines, who are expected to start operating in the LA area on Wednesday, according to the US Northern Command.
Read more from Sky News:
Eyewitness: Furious immigrants vow to ‘defend’ LA
What we know about the LA immigration raids and protests
Explainer: Who is Gavin Newsom?
The Ronald Reagan Federal Building and Courthouse in Santa are boarded up. Pic: Mindy Schauer/The Orange County Register via AP
National Guard troops are lined up to protect a federal building in downtown LA. Pic: AP/Eric Thayer
State officials said Mr Trump’s response was an extreme overreaction to mostly peaceful demonstrations, with California senators Adam Schiff and Alex Padilla saying the domestic mobilisation of active-duty military personnel should only happen “during the most extreme circumstances, and these are not them”.
Mr Trump defended his decision in a speech to soldiers at the Army base in Fort Bragg, North Carolina, saying his administration would “liberate Los Angeles”.
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Trump: ‘We will liberate Los Angeles’
“Generations of Army heroes did not shed their blood on distant shores only to watch our country be destroyed by invasion and third-world lawlessness,” Mr Trump said.
“What you’re witnessing in California is a full-blown assault on peace, on public order and on national sovereignty, carried out by rioters bearing foreign flags.”
A protester is arrested by law enforcement officers in downtown LA. Pic: AP/Eric Thayer
California Highway Patrol officers clash with protesters in LA. Pic: AP/Eric Thayer
Gavin Newsom launched a blistering response in an address on Tuesday evening, saying the deployment of the National Guard without consulting Californian officials was a “brazen abuse of power by a sitting president”.
He said it “enflamed a combustible situation, putting our people, our officers and even our National Guard at risk”.
“That’s when the downward spiral began. He doubled down on his dangerous National Guard deployment by fanning the flames even harder – and the president, he did it on purpose,” Mr Newsom said.
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The governor accused Mr Trump of choosing escalation and “theatrics over public safety”, as the situation was “winding down” before the president deployed the troops.
Mr Newsom added: “When Donald Trump sought blanket authority to commandeer the National Guard, he made that order apply to every state in this nation.
“This is about all of us, this is about you. California may be first, but it clearly won’t end here; other states are next. Democracy is next. Democracy is under assault before our eyes.”
A man holds a Mexican flag, which has become synonymous with solidarity for migrants targeted in the raids. Pic: AP/Damian Dovarganes
A protester holds up a placard while marching through downtown LA. Pic: Reuters/Leah Millis
People protest against the ongoing immigration raids in Washington, D.C. Pic: AP/Julia Demaree Nikhinson
Homeland Security said on Monday that ICE had arrested 2,000 immigration offenders per day recently, which significantly exceeds the 311 daily average in the fiscal year 2024 under former president Joe Biden.
The protests over the immigration raids have started to spread across the US, with demonstrations in cities like Seattle, Austin, Chicago and Washington, DC.
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