A Minnesota farmer worries about the price of fertilizer. A San Diego entrepreneur deals with an unexpected cost increase of remodeling a restaurant. A Midwestern sheet metal fabricator bemoans the prospect of higher aluminum prices.
Businesses knew that Trump’s import tariffs on America’s biggest trading partners were scheduled to take effect Tuesday. But many of them assumed they’d get a reprieve. After all, the president had delayed the tariffs on Canada and Mexico for 30 days right before they were originally supposed to kick in on Feb. 4.
No such luck this time.
At midnight Tuesday, the U.S. imposed 25% tariffs on goods from Canada and Mexico, starting a trade war with its closest neighbors and allies. Trump also doubled his 10% levies on Chinese imports in a series of moves that took U.S. tariffs to the highest level since the 1940s. Canadian energy was shown some mercy, getting taxed at a lower 10%.
The three countries promptly announced retaliatory tariffs of their own.
Commerce Secretary Howard Lutnick said later on Tuesday that the U.S. would likely meet Canada and Mexico “in the middle.” Lutnick later told Fox Business News that the tariffs would not be paused, but that Trump would reach a compromise.
The longer the tariffs stick, the more damage they can do, forcing companies to decide between eating higher costs or passing them along to inflation-weary consumers. If the tariffs and the retaliation last a year, economist Kathy Bostjancic of Nationwide estimates, U.S. economic growth will be more than 1 percentage point lower and inflation 0.6 percentage points higher than they would have been otherwise.
