• Proposed 25% tariffs on goods from Mexico and Canada could raise U.S. gas prices by up to $1 per gallon and increase grocery bills due to higher costs on crude oil, fresh produce, and auto parts.
• Mexico supplies 90% of avocados consumed in the U.S., and Canada provides 70% of crude oil imports, making both countries essential trade partners likely to impact food and energy prices.
• Additional industries, such as alcohol and auto manufacturing, face significant disruptions, potentially leading to higher vehicle prices and strained supply chains.

The looming tariffs on goods from Mexico and Canada may have a significant impact on U.S. consumers, potentially raising gas prices by up to $1 per gallon and increasing grocery bills, experts warn. The proposed 25% tariffs, set to take effect on February 1, 2024, could ripple through various industries, affecting everything from crude oil and gasoline to fresh produce and auto parts.

Gas Prices Could Surge with Canadian Imports

Canada and Mexico are vital suppliers of crude oil to the U.S., accounting for 70% of crude oil imports, according to the U.S. Energy Information Administration (EIA). Canadian crude oil is specifically processed in U.S. refineries, which distribute it as gasoline for drivers across the Midwest, East Coast, and West Coast.

Timothy Fitzgerald, a business economics professor at the University of Tennessee, explains that tariffs on Canadian crude could lead to gas price increases of 40 to 70 cents per gallon in regions relying on these imports. Demand for gas typically rises in the spring, further compounding the price hikes. Fitzgerald predicts that if tariffs coincide with this seasonal spike, gas prices could climb an additional 30 cents, potentially increasing by $1 per gallon in affected areas.

Grocery Bills Face Potential Hikes

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Mexico, the top exporter of agricultural goods to the U.S., could see its produce exports significantly affected by the tariffs. In 2023, the U.S. imported $38.5 billion in agricultural products from Mexico, including $3 billion in fresh fruits and vegetables such as avocados, tomatoes, cucumbers, and limes.

Jason Miller, a Michigan State University professor specializing in supply-chain management, notes that roughly 90% of avocados consumed in the U.S. come from Mexico. Replacing Mexican imports with domestic production or alternative suppliers would be challenging, making price increases likely.

“You’d certainly expect to see an impact on prices,” Miller said.

Alcohol and Auto Industries Also at Risk

The tariffs could also disrupt the U.S. alcohol and auto industries. In 2022, the U.S. imported $26 billion worth of beer, tequila, and other alcoholic beverages from Mexico, according to the USDA. Miller highlights the popularity of Mexican beer in the U.S., underscoring the potential impact on consumers.

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Meanwhile, the auto industry, which relies heavily on Mexico and Canada for vehicles and car parts, faces similar challenges. A Cato Institute analysis revealed that Canada and Mexico accounted for nearly $120 billion worth of motor vehicle imports in 2023, making up 47% of all such imports that year. Tariffs could strain operations for automakers on both sides of the border and lead to higher vehicle prices for U.S. consumers.

“The operations of auto companies on both sides of the border will be hugely affected by these tariffs,” said Robert Lawrence, a professor at Harvard University’s Kennedy School of Government.

Broader Economic Implications

Tariffs of this magnitude could force importers to pass some or all of the added costs onto consumers, further straining household budgets. While the exact price impacts remain unclear, the list of affected products is extensive, from tequila and beer to auto parts and gasoline.

However, some experts suggest businesses in the supply chain might absorb part of the tax burden to mitigate price increases. Additionally, the tariffs might not take effect, as the Trump administration has previously used such measures as leverage in international negotiations.

White House Defends Tariff Plan

In response to inquiries from ABC News, White House spokesperson Kush Desai defended the administration’s tariff policy, citing its success in fostering economic growth during Trump’s first term.

“In his first administration, President Trump instituted an America First economic agenda of tariffs, tax cuts, deregulation, and an unleashing of American energy that resulted in historic job, wage, and investment growth with no inflation,” Desai said. “In his second administration, President Trump will again use tariffs to level the playing field and usher in a new era of growth and prosperity for American industry and workers.”

Share Your Thoughts

As tariffs loom, the potential economic ripple effects are becoming clearer, from rising gas prices to increased grocery bills. What are your thoughts on these proposed tariffs and their possible impacts on your daily life?

We’d love to hear from you in the comments below. Don’t forget to share this article with friends and family to spread awareness. For more in-depth coverage, visit The Dupree Report.

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