The U.S. government's recent decision to impose significant tariffs on imports from Canada, Mexico, and China is sending ripples through the economy. Starting March 4, a 25% tariff on goods from Canada and Mexico, and a 10% tariff on Chinese imports, are set to drive up costs for major construction materials.
With about 30% of lumber coming from Canada, 70% of lime and gypsum from Mexico, and over 5% of steel and aluminum from China, these tariffs are poised to increase prices for everyday consumers. A study by the U.S. International Trade Commission highlights that each percentage point rise in tariffs leads to a 2-percentage point drop in the quantity and value of imports.
This decrease in imports, coupled with steady domestic demand, is pushing prices higher. Supply chain participants are likely to pass these increased costs onto consumers, exacerbating the financial strain on American households.
Economic analyses reveal that these tariffs will reduce after-tax incomes across all taxpayer groups, with lower-income households bearing the brunt of the impact. The Peterson Institute for International Economics warns that the total import taxes could translate to an annual tax increase of over $1,200 per household—the largest tax hike in the U.S. this century.
Adding to concerns, inflation expectations among Americans are climbing. A University of Michigan survey indicates that inflation expectations for 2025 have reached 4.3%, the highest since November 2023. For many already struggling with persistent inflation, the new tariffs could worsen financial pressures, challenging the narrative of making America great again.
Reference(s):
cgtn.com
