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 says he will meet with Russian President Vladimir Putin for face-to-face talks in Hungary after the pair made “great progress” during a “very productive” phone call on Thursday.
Mr Trump did not confirm a date for the proposed meeting, but the Kremlin said work would begin “immediately” after the “extremely frank and trustful” call, which it said took place at Moscow’s request.
It would be the second face-to-face meeting between the two leaders since Mr Trump returned to the White House in January, having met in August for a summit in Alaska.
Mr Trump and Mr Putin also agreed that “high level advisors” from Washington and Moscow will meet next week, with US Secretary of State Marco Rubio leading the US delegation.
Mr Rubio and vice president JD Vance were also present on the call with Mr Putin, White House press secretary Karoline Leavitt said.
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Trump-Putin call ‘good and productive’
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Writing on his Truth Social platform after the call, Mr Trump said he “spent a great deal of time” talking to the Russian leader about potential trade between their countries when the war in Ukraine is over.
The call came a day before Volodymyr Zelenskyy’s visit to the White House. Ukraine’s president is hoping to secure Mr Trump’s support to use US Tomahawk missiles, capable of striking deep into Russia.
Mr Putin warned Mr Trump during their call that handing Ukraine the missiles it wanted would harm US-Russia ties and the peace process, Kremlin foreign policy adviser Yuri Ushakov told reporters.
The Russian also congratulated Mr Trump for brokering the ceasefire between Israel and Hamas in Gaza earlier this week and praised his wife, Melania Trump, for her efforts to reunite displaced Ukrainian children with their families.
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Why are Trump and Putin meeting in Budapest?
According to the Kremlin, Mr Trump suggested Budapest as the location for face-to-face talks with Mr Putin, who immediately agreed to the plan.
Hungarian Prime Minister Viktor Orban, a vocal advocate for dialogue with Russia and critic of EU sanctions on Moscow, welcomed the news enthusiastically, calling Hungary an “island of peace” and confirming preparations after speaking with Mr Trump.
Budapest was among the shortlisted sites for the last summit between Mr Trump and Mr Putin in Alaska.
It also holds historical significance. In 1994, Ukraine surrendered the world’s third-largest nuclear arsenal in exchange for security guarantees through the Budapest Memorandum.
Signed by Russia, the US, and the UK, the agreement promised to protect Ukraine’s sovereignty. It was ultimately broken when Russia annexed Crimea in 2014 and launched a full-scale invasion in 2022.
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What happened in Alaska?
Mr Trump met Mr Putin on US soil on 15 August for a summit which the US leader hoped would help convince the Russian president to enter peace talks to end the Ukraine war.
There were hopes after the call that a trilateral summit could be scheduled that would include Ukraine’s Volodymyr Zelenskyy, but no meeting was arranged.
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Trump and Putin met in Alaska for a summit on Ukraine.
Mr Putin spoke to Mr Trump again days after the summit when European leaders, including Mr Zelenskyy, were at the White House.
There’s been no public confirmation from the White House or the Kremlin that any communication has taken place between the two since then, in which time Mr Trump has taken a tougher line towards Moscow.
In September, Mr Trump signalled a major shift in his stance on the war, saying he believed Kyiv could “win all of Ukraine back in its original form”, having previously suggested the country might need to cede territory occupied by Russia.
Donald Trump’s ex-adviser John Bolton has accused the president of attempting to “intimidate his opponents” after being criminally indicted on federal charges.
Mr Bolton has been charged with illegally storing and transmitting classified information – alleged crimes which could see him face decades behind bars.
He has been one of Mr Trump‘s most vocal critics since being sacked from his first administration in 2019, and described him as being unfit for office ahead of last year’s election.
He said the charges filed on Thursday were an effort by the president to “to ensure that he alone determines what is said about his conduct”.
“I look forward to the fight to defend my lawful conduct and to expose his abuse of power,” he added.
Why has Bolton been charged?
The FBI searched his Maryland home and Washington office in August for records he may have kept from his time in government, and previously unsealed court filings said agents found multiple documents labelled as “classified”, “confidential”, and “secret”.
Some appeared to concern weapons of mass destruction and national “strategic communication”, they said.
FBI members carrying boxes outside Bolton’s home in August. Pic: Reuters
Thursday’s indictment alleges Bolton retained multiple files – and used personal email and messaging accounts to transmit documents classified as top secret, the US justice department said.
He has been charged with eight counts of transmission of national defence information (NDI), as well as 10 counts of unlawful retention of NDI, the department said.
Each charge comes with a maximum sentence of 10 years in prison.
Mr Bolton and his lawyer have denied any wrongdoing.
For four decades, I have devoted my life to America’s foreign policy and national security,” he said.
“I would never compromise those goals.”
Asked by reporters at the White House about Mr Bolton facing charges, Mr Trump said: “He’s a bad guy.”
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It marks the third time in recent weeks the US justice department has secured criminal charges against one of the president’s critics.
Ex-FBI director James Comey – who was fired by Mr Trump in 2017 – is facing charges of making false statements to Congress and obstruction of Congress, which he denies.
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New York Attorney General Letitia James, who previously brought a civil fraud case against Trump and his family real estate company, is facing charges of bank fraud and making false statements to a financial institution. She has denied wrongdoing.
Bolton served as US ambassador to the UN, as well as White House national security adviser, before being sacked by Mr Trump in 2019.
Venezuela’s President Nicolas Maduro has accused the US of a coup attempt after Donald Trump approved CIA operations in the country to tackle alleged drug trafficking.
Mr Trump confirmed his decision, first revealed by The New York Times, as he said large amounts of drugs were entering the US from Venezuela – much of it trafficked by sea.
“We are looking at land now, because we’ve got the sea very well under control,” he said.
When asked why the coastguard wasn’t asked to intercept suspected drug trafficking boats, which has been a longstanding US practice, Mr Trump said the approach had been ineffective.
“I think Venezuela is feeling heat,” he said.
Donald Trump at the White House on Wednesday evening. Pic: Reuters
Maduro hits back
He declined to answer whether the CIA has the authority to execute Mr Maduro, who denies accusations from Washington that he has connections to drug trafficking and organised crime.
The US has offered a $50m (£37m) reward for information leading to his arrest.
“How long will the CIA continue to carry on with its coups?” he asked after Mr Trump’s comments on Wednesday evening, saying calls for regime change harkened back to “failed eternal wars” in Afghanistan and Iraq.
In a message to the American people, he said in English: “Not war, yes peace. The people of the US, please.”
President Nicolas Maduro. Pic: Reuters
US targets ‘drug boats’
Mr Trump also alleged Venezuela had sent a significant number of prisoners, including individuals from mental health facilities, into the US, though he did not specify the border through which they reportedly entered.
On Tuesday, he announced America had targeted a small boat suspected of drug trafficking in waters off the Venezuelan coast, resulting in the deaths of six people.
According to the president’s post on social media, all those killed were aboard the vessel.
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Footage of the strike was released by Donald Trump on social media. Pic: Truth Social
The incident marked the fifth such fatal strike in the Caribbean, as the Trump administration continues to classify suspected drug traffickers as unlawful combatants to be confronted with military force.
War secretary Pete Hegseth authorised the strike, according to Mr Trump, who released a video of the operation.
The black-and-white footage showed a small boat seemingly stationary on the water. It is struck by a projectile from above and explodes, then drifts while burning for several seconds.
Mr Trump said the “lethal kinetic strike” was in international waters and targeted a boat travelling along a well-known smuggling route.
There has also been a significant increase in US military presence in the southern Caribbean, with at least eight warships, a submarine, and F-35 jets stationed in Puerto Rico.
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