After months of delays, President Donald Trump’s contentious tariff barrage is now in effect, imposing a wide variety of new import duties, including on products from Canada and Mexico. While Trump has very optimistically dubbed April 2 “Liberation Day,” economists and other experts have given much more grim forecast for how these tariffs will work and how badly they will inflate the everyday costs of folks like you.
Trump proposed a wide variety of steep tariffs during his 2024 reelection bid, and while the ones set to take effect on Wednesday aren’t as severe as those, they have still prompted widespread alarm from economists and frequently caused markets to nosedive as they get closer to taking effect. While the president once claimed (with little evidence) that his tariffs would cause no pain for US consumers, he has more recently admitted that some “pains” are likely, reigniting concerns about the cost of living as prices have continued to creep up.
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Tariffs against China, for example, prompted Acer to announce impending price hikes coming to its laptops very soon, with similar price increases from other companies expected soon on things like smartphones, laptops, tablets and TVs. A new survey conducted by CNET found considerable anxiety about prices among US adults. Additionally, a recent report from popular insurance-comparison site Insurify predicted that, based on available data, tariffs on Canada and Mexico could cause an 8% increase in auto insurance costs by the end of 2025
So what exactly are these tariffs that are causing such a frenzy? And more to the point, what do they mean for the prices you’ll see when crossing things off your shopping list? The short answer: Expect to pay more for at least some goods and services. For the long answer, keep reading, and for more, find out how tariffs could affect the price of a popular gaming console.
What exactly is a tariff?
Put simply, a tariff is a tax on the cost of importing or exporting goods by a particular country. Therefore, a 60% tariff on Chinese imports would be a 60% tax on the cost of importing computer components from China.
Trump has been fixated on imports as part of his economic plans, often claiming that the money collected from taxes on imported goods would help finance other parts of his agenda. The US imports $3 trillion of goods from other countries annually.
While Trump deployed tariffs in his first term, notably against China, he ramped up his plans much more for the 2024 campaign, promising steeper 60% tariffs against China and a universal 20% tariff on all imports into the US. “Tariffs are the greatest thing ever invented,” Trump said at a campaign stop in Michigan last year. More recently, he called himself “Tariff Man” in a post on Truth Social.
Who pays the cost of a tariff?
During the 2024 campaign, Trump repeatedly claimed that the country where an imported good is coming from pays the cost of the tariffs and that Americans would not see any price increases from them. However, as economists and fact-checkers stressed, this is not always the case.
The companies importing the tariffed goods — American companies or organizations in this case — pay the higher costs. To compensate for those new costs, companies have a choice: raise their prices or absorb the additional cost themselves.
So who ends up paying the price for tariffs? In the end, usually you, the consumer. In February, Trump admitted consumers might “feel pain” financially as his tariffs take effect. For instance, a universal tariff on goods from Canada would increase Canadian lumber prices, which would have the knock-on effect of making construction and home renovations more expensive for US consumers.
Some companies may opt to eat the new costs resulting from tariffs themselves rather than pass them onto consumers, at least temporarily. On March 2, Chipotle CEO Scott Boatwright told NBC Nightly News, “It is our intent as we sit here today to absorb those costs,” but he also stressed that prices could go up eventually.
Which tariffs have gone into effect?
Given how often Trump promises, threatens or simply muses about deploying specific tariffs, you’d be forgiven for not knowing which ones are actually in effect. Tariffs against goods from Canada and Mexico were implemented on March 4, but after just two days, there have already been major changes. For the most part, these duties will impose a 25% tax on all imports from these neighboring countries, with the exception of Canadian energy imports, which are being taxed 10%.
On March 6, the administration announced that tariffs on goods from Mexico and Canada were delayed until April 2. This decision applies to all goods covered by a US-Mexico-Canada Trade Agreement signed during Trump’s first term, which covers half of all imports from Canada and a little over a third from Mexico. This comes after automotive tariffs were similarly delayed to April 2 for North American companies covered by the US-Mexico-Canada Trade Agreement, which came after the administration met with leaders from several major car manufacturers.
As the April 2 date approached, however, reports circulated suggesting that the Trump administration might be narrowing the scope of the incoming tariffs considerably, though specifics about this were slim. It was suggested that there would be a move away from industry-specific tariffs and putting the focus on reciprocal tariffs against countries seen as having a trade imbalance with the US, but this was swiftly rebuked on March 27 when Trump announced a 25% tariff on all foreign cars.
Those tariffs join an overall tariff on Chinese imports, which went into effect on Feb. 4 at 10% but was increased to 20% on March 4. Trump has mused that these tariffs against China could be eased in exchange for the sale of TikTok. A universal tariff on steel and aluminum from all foreign countries took effect on March 12, with Trump later denying that any exemptions were planned for certain countries.
Canadian Prime Minister Justin Trudeau announced tariffs on $100 billion worth of US imports in response over the course of three weeks. Mexico’s President Claudia Sheinbaum also announced retaliatory measures to be revealed on March 9 but instead held a public celebration after the tariffs were delayed to April. On March 10, Ontario Premier Doug Ford retaliated against these tariff threats by imposing a 25% tariff on the electricity the province sends to the US, which Trump responded to by doubling the steel and aluminum tariff to 50% for Canada. Both those decisions, however, were swiftly retracted as each side agreed to further trade talks.
During his joint address to Congress on March 4, Trump also pledged new tariffs against India to start on April 2, but ongoing trade talks with the country may have halted or stalled that plan. On March 7, Trump also raised the possibility of tariffs against Russia if no ceasefire deal can be reached with Ukraine.
What will tariffs do to prices in the US?
Economists and American industry leaders have repeatedly warned that Trump’s tariff plans would increase prices across the board. Last year, the Peterson Institute for International Economics estimated that Trump’s plans could end up costing each American family an extra $2,600 a year. More recently, it estimated that Trump’s specific tariffs against China, Mexico and Canada would cost families $1,200 more annually. Economists have also warned that these tariffs would do the opposite of fighting inflation.
“For consumers, tariffs are like another form of inflation, just spelled differently,” Darpan Seth, CEO of business strategy and software firm Nextuple, told USA Today in February. “They have the same effect of rising prices.”
Patti Brennan, CEO of Key Financial, predicted in an email to CNET that no products would be safe from these price hikes and that tariffs “could have a systemic effect” on the cost of goods, even ones not coming from targeted countries.”
“Even if products aren’t coming from the countries affected, companies can increase prices and just blame it on rising costs due to tariffs,” she wrote. “They’ll assume the consumer is well aware of the issue of tariffs and test the boundaries until demand falls off.”
Brennan noted the cost of services should be safe for now. As opposed to goods, which are the tangible products you buy, services are the things you pay for people or companies to do for you, ranging from haircuts and deliveries to legal work and medical care. “Services should be relatively resilient, and consumers (already) spend more on services than on goods,” she explained.
In February, Taiwanese computer hardware company Acer announced that the prices of its products would see a 10% increase in March, directly resulting from the Trump tariff on Chinese imports. Acer is the world’s sixth largest personal PC vendor by sales. Other PC makers like Dell and Asus are expected to make similar moves eventually.
When the Canada and Mexico tariffs initially took effect on March 4, Target CEO Brian Cornell warned that customers could expect higher prices in stores “over the next couple of days.” Echoing that sentiment, Best Buy CEO Corie Barry warned that price hikes were “highly likely” because of the tariffs, as China and Mexico are two of the company’s biggest suppliers.
Now, American consumers are feeling anxiety over prospective purchases being impacted by tariffs. As found in CNET’s recent survey, around 38% of shoppers feel pressured to make certain purchases before tariffs make them more expensive. Around 10% say they have already made certain purchases in hopes of getting in before the price hikes, while 27% said they have delayed purchases for things over $500. Generally, this worry is the most acute concerning electronics — like smartphones, laptops and home appliances — which are highly likely to be impacted by Trump’s tariffs.
What is the goal of the White House tariffs?
The typical goal behind tariffs is to discourage consumers and businesses from buying the tariffed goods. In the case of Trump’s plan, he has claimed the tariffs will encourage more people to buy American-made products and more companies to create jobs in the US, and will punish overseas producers with shoddy working conditions.
Economists warn these tariffs could instead lead to sustained price increases, job losses in the domestic labor market, and retaliatory tariffs on US exports by foreign countries, which are already starting, that will hurt American businesses. Brennan also said it’s hard to predict right now if tariffs will benefit the US economy long-term after the initial price shocks.
“It will be painful short-term, but it will reveal how resilient our economy is (or isn’t),” she wrote. “If tariffs are successful in raising revenue, it could reduce the amount of our annual deficit (shortfall). This could postpone the need to increase taxes on all Americans. In the end, no one really knows what the outcome will be, for example, in spite of higher inflation than the Federal Reserve’s target of 2%, the dollar grew in value.”
“Just as we don’t always win other types of wars, I’m not sure a trade war is going to accomplish the stated goals. What we do know is that we’ve already seen the impact tariffs have in negotiating with our neighbors on other issues like border control and drug trafficking,” she continued. “The leverage cannot be denied.”
For more, see how tariffs might raise the price of Apple products and find out some expert tips for saving money.
