Summary:
- New tariffs targeting imports from Mexico, Canada, and China are set to be implemented on February 1. These include a 25% tariff on imports from Mexico and Canada and 10% on those from China.
- The upcoming tariffs could impact 42% of U.S. imports by volume, potentially impacting a significant portion of goods entering the country.
- In response, Canada, Mexico, and China may take retaliatory actions that could adversely affect key U.S. industries including agriculture, machinery, and automotive. Collectively, these countries account for over 50% of U.S. exports by volume.
Overview
During its first term, the Trump administration heavily utilized tariffs as a key policy tool, a stance reaffirmed during the 2024 election campaign. The campaign highlighted the following tariffs as part of its platform:
- Tariffs on Canada and Mexico
- Tariffs on China
- A Universal Baseline Tariff
- Tariffs on the European Union
- Tariffs on Brazil, Russia, India, China, and South Africa (BRICS) Nations
More information on these tariffs can be found here. As of now, almost two weeks into the current administration, no new tariffs have been enacted, but this could soon change. Starting February 1, proposed tariffs targeting Mexico, China, and potentially other countries could go into effect. This follows the administration’s previous threats of imposing tariffs on Colombian imports as a response to the country’s reluctance to accept deported migrants. Although an agreement was ultimately reached with Colombia, the situation highlights how the Trump administration uses tariffs as bargaining tools. Additional tariffs increase costs of import goods, and can lead to retaliatory measures from other countries, making United States exports less competitive.
Impact of tariffs on U.S. imports
According to data from the millions of shipments managed annually by project44, the United States primarily imports goods from the following top countries by volume:
For imports from Mexico and Canada, tariffs set to increase to 25%, while goods from China will face a 10% tariff. China alone accounts for 36% of all U.S. import volume according to our data, meaning these three countries together account for 42% of import volume into the United States in 2024.
The U.S. imports a wide range of goods from these trade partners. According to Statista, key imports from Mexico include vehicles, machinery, and motor vehicle parts, while Canada supplies significant quantities of crude petroleum, cars, and petroleum gas. China is a major source of machinery, including broadcasting equipment, computers, office machine parts, and a wide variety of consumer goods like clothes and toys. Tariffs on these goods, especially in the automotive, energy, and electronics sectors, could raise costs for U.S. industries and consumers relying on affordable imports, with potential price hikes for cars and machinery.
Impact of tariffs on U.S. exports
When a country levies new tariffs, affected countries often respond with tariffs of their own. This was the case in 2018 when China retaliated to new U.S. tariffs by imposing their own on imports from the U.S., which significantly impacted agricultural products. The added tariffs caused prices of U.S.-grown soybeans to surge in China, leading to a steep drop in demand.
Below are the countries that see the most American exports based off project44 data. Note that this is based off of volume of shipments managed in our platform, rather than value of goods.
With China separated out of the BRICS nations, they receive 8.5% of exports. This means that retaliatory measures taken by Canada, China, and Mexico could impact more than half of the shipments exported from the United States.
Canada is the largest consumer of United States exports, both by volume and value. Their main imports include vehicles, machinery and agricultural products, which are also the main imports into Mexico. China imports the lowest value of goods from the United States out of the three countries. Their main import is agricultural products, followed by aircrafts and machinery. These three countries are the top importers of agricultural products from the U.S., so if retaliatory tariffs are passed, U.S. farmers could face a huge strain with a steep drop in demand, with impact spanning to machine manufactures and the automotive industry as well.
Summary
The potential imposition of tariffs on imports from Mexico, Canada, and China beginning February 1 could significantly impact U.S. imports and exports. The 25% tariffs on Mexican and Canadian goods, and the 10% tariff on Chinese goods, could disrupt supply chains, affecting a wide range of industries, including agriculture, machinery, and automotive. Retaliatory tariffs from these countries could further strain U.S. exports, particularly agricultural products. With these three countries accounting for over 50% of U.S. exports by volume, the ripple effects of these changes are likely to be felt across several sectors.
