The United States expanded the global trade war by enacting new tariffs Tuesday on Canada, Mexico and China, and those countries reacted in-kind with new import taxes on American-made goods.
Experts say inflation-weary consumers and businesses can expect those taxes to hike the prices of goods in the weeks ahead if President Donald Trump and other world leaders do not reverse course or find an off-ramp to trade tensions.
Credit: AP
Credit: AP
The stock market slumped and shares of many Georgia companies, including Delta Air Lines, agricultural equipment maker AGCO, car dealer Asbury Automotive and flooring company Mohawk Industries, were all in the red at midafternoon.
A study by one Washington, D.C.-based think tank last month put the tab to the typical household of more than $1,200 per year. Major retailers including Target and Best Buy warned Tuesday that prices will rise because of tariffs.
Credit: Massey Ferguson
Credit: Massey Ferguson
“We’re not entirely sure how high prices could get because it does depend on how much certain businesses can absorb the higher costs,” Katie Deutschler, a partner at accounting firm Moore Colson, told The Atlanta Journal-Constitution.
The new levies on Canada, Mexico and China come amid a flurry of import tax threats that Trump has touted as a way to return manufacturing jobs to the U.S. Trump has also used tariffs to seek concessions for border security and to stem the cross-border flow of drugs.
Consumers can expect products such as smartphones, computers, groceries and gasoline to increase in price. Cars made by American brands often source parts or are even assembled in Canada or Mexico, meaning the prices of vehicles from the Big Three are likely to surge, which could make U.S. brands less competitive and blunt sales.
Georgia has emerged as a leader in the automotive sector thanks to factories from South Korean brands Kia and Hyundai. In statements, Kia and Hyundai touted their billions in U.S. investments but both said Tuesday they’re evaluating the impacts to their operations.
Tariffs are taxes on imported goods and economists consider them inflationary. Those taxes typically are passed along by businesses to the buyers of products, whether the buyers are manufacturers obtaining parts that go into other things or a consumer shopping at a store or online.
Trump’s order slaps goods coming from Canada and Mexico with 25% import taxes (10% on energy imports from Canada). On Tuesday, Trump added another 10% tariff on goods from China on top of across-the-board 10% tariffs on Chinese goods the U.S. levied last month.
China retaliated last month with levies on agricultural and other heavy equipment and vehicles. On Tuesday, China said it would put more tariffs in place, hitting agricultural products, including chicken, Georgia’s top agricultural product.
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Canada and Mexico also announced retaliatory measures on U.S. goods.
USA Poultry & Egg Export Council President Greg Tyler urged “all parties involved” to work toward a quick resolution to minimize damage.
The poultry sector has already taken a hit from bird flu.
“The imposition of tariffs has created a volatile environment for U.S. producers, and the ripple effects of these disputes are going to be felt across the entire supply chain‚” Tyler said in a statement.
Canada, Mexico and China are among the top buyers of Georgia-made products, meaning with retaliatory measures the products made here will be more expensive there, which could hurt sales for Georgia producers.
How much could these tariffs cost you?
Estimates vary, but prices will go up, economists warn.
The Federal Reserve Bank of Atlanta released a report Friday that said proposed tariffs on China, Mexico, Canada and other U.S. trading partners could raise prices for consumers on everyday items by up to 2.6%. The tariffs on Mexico and Canada drive almost half the price effect, the study’s authors found.
The Peterson Institute for International Economics said in a report last month that Trump’s tariffs on those three countries could cost the typical household more than $1,200 a year.
Treasury Secretary Scott Bessent on Sunday called those projections “a bit alarmist.”
Credit: AP
Credit: AP
“I think a lot of their supporters are anti-tariff, so they take an anti-tariff position,” he told CBS News. He said the broader sweep of Trump’s economic policies, including cuts to regulation, would keep inflation in line.
Economists say lower income Americans are most impacted because they are likely spending most of their income and for those households, there isn’t enough left after paying for basic necessities to put into savings.
An analysis by the nonpartisan Tax Foundation estimates the tariffs against China, Mexico and Canada will each decrease U.S. economic output by 0.1%, not including the impacts of any foreign retaliation.
Top imports into Georgia from overseas include vehicles, immunological products, computers, telephone sets and other communications equipment and auto parts, according to 2024 data from the Georgia Department of Economic Development.
Across the U.S., autos (nearly $93 billion) and auto parts (nearly $78 billion) are the top two imported products from Mexico, data from the Census Bureau show. The U.S. also imported more than $11 billion in produce from Mexico in 2023.
Oil (about $108 billion), autos (about $43 billion) and auto parts (about $14 billion) were top products from Canada sold in the U.S. Meats and baked goods also were high on the list.
Could tariffs hit gas prices?
It’s likely, though gas prices are relatively low given lower demand since the holidays.
On Monday morning, the average price of a gallon of unleaded gas in Georgia was $2.94, according to auto club AAA. That’s about the same as it was a month ago and about 26 cents less than a year ago.
Even though the U.S. is the top global producer of oil, the country still imports oil from other countries. Canada is the largest source of foreign oil, and that oil is largely refined in the U.S.
It’s likely that tariffs on Canadian oil would find their way into gas prices here. Increased demand from the spring and summer driving seasons loom.
How big is foreign trade in Georgia?
The U.S. is the top importer in the world.
Mexico was the top source of goods imported into Georgia at $18.6 billion. China was No. 2 at $17.2 billion. South Korea was third at $16.6 billion.
But exporting goods abroad is also big business for the U.S., and Georgia is a top producer of goods made here and sold elsewhere.
Georgia posted its fourth straight record year for international trade in 2024.
Retaliatory tariffs could also have a significant effect on exports, which account for roughly 6% of Georgia’s gross domestic product.
Canada, Mexico and China are the top three buyers of Georgia-made products.
Credit: Stephen B. Morton for The Atlanta Journal Constitution
Credit: Stephen B. Morton for The Atlanta Journal Constitution
Georgia’s top exports are civilian aircraft and ancillary parts, motor vehicles, computers, telephone sets and medical devices.
“We have a lot of heavy equipment manufacturers in Georgia, automotive suppliers in Georgia as well as agriculture equipment manufacturers,” Deutschler, the Moore Colson Partner, said. “They’re already planning on being transparent with their customers and applying some surcharges on certain pieces of equipment that they have to purchase.”
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