(31 January 2025 – United States) American importers will pay higher prices that will inevitably be passed onto consumers and cause a knock-on retaliation effect from targeted countries including Canada, Mexico, China and the EU, raising inflation and cost-of-living pressures ING reports.
China, Mexico and Canada in total account for over 42 percent of all goods imports into the US. The primary source of the growth of US imports is actually Asia and predominantly Taiwan, Korea, Vietnam and Thailand.
The strong suspicion is “transshipment” of Chinese products in origin that have been shipped to these other countries and rebadged with a new country sticker in order to avoid current US tariffs on Chinese products, explaining the significant recent decline in US imports directly from China since early 2020 from over 21 percent to less than 14 percent today and in fact be surpassed by Mexico in mid-2022.
“Instead of taxing our citizens to enrich other countries. We will tariff and tax foreign countries to enrich our citizens. Massive amounts of money pouring into our Treasury, coming from foreign sources. The American dream will soon be back and thriving like never before” said President Trump in his inauguration address.
“As we saw with washing machines in 2018, which were subject to a 20 percent tariff from the first Trump administration, there was a roughly three-month wait until the tariffs impacted consumer prices as retailers sold their existing inventory that hadn’t been subject to the tariff. Consequently, as understanding of the tariffs becomes more apparent in the population we could get a modest short-term boost to consumption, but medium to longer term there will be a squeeze on spending power that likely results in weaker spending growth.”