A price hike is headed for shoppers in the US, and it could send shockwaves across industries, ranging from cheap gadgets and affordable fashion to electric vehicles. President Donald Trump, invoking the International Emergency Economic Powers (IEEPA) Act and the National Emergencies Act (NEA), has imposed a fresh round of sweeping tariffs on Canada, Mexico, and China.
Items sourced from Mexico and Canada will now face a 25% tariff, while those coming from China will have to contend with an extra 10% duty. Now, there are multiple ways in which the tariffs could the pockets of American shoppers. This is what the Tax Foundation laid out in its estimates:
“The tariffs on Canada and Mexico alone would increase taxes by $958 billion between 2025 and 2034 on a conventional basis, amounting to an average tax increase of more than $670 per US household in 2025.”
President Trump is implementing a 10 percent tariff on China until we secure the full cooperation of the Chinese government in the fight against fentanyl. China plays the central role in the fentanyl crisis that is destroying American lives.
In fact, the Chinese Communist Party… pic.twitter.com/pAFfC76nNq
— The White House (@WhiteHouse) February 1, 2025
Items sourced from China, which include popular high-volume goods such as iPhones, might get pricier. Until now, a healthy bunch of top-selling items in the electronics category, such as phones and TVs, have enjoyed tariff exemption.
“The 10% blanket tariff Trump is proposing could affect the price of everything that is made in China and exported to the US. That applies to a lot of things – from toys and tea cups to laptops,” says a BBC analysis.
Exemptions, no more
But it’s not just the tariffs that could spell trouble for US shoppers, but also the retaliatory taxes. As per experts, who cited historical precedent, most companies would pass on the cost of increased duties to customers.
The probability of that happening seems high. China has threatened countermeasures, while Mexico and Canada have already announced their respective retaliatory tariffs.
The press statement issued by the White House also mentions that the de minimis exemption no longer applies. As per the International Trade Administration, imported items in the US worth $800 or less in value are not subject to any tariffs, taxes, or fees.
The low-cost benefit is gone
Earlier, the value was $200, but in 2016, Congress increased the de minimis threshold to $800. The de minimis exemption’s removal is going to hurt shoppers, especially folks buying goods from popular e-commerce platforms such as Shein, Temu, JD.com, and Alibaba.
As per data provided by the US Customs and Border Protection, goods worth over $47 billion were shipped into the US after qualifying for the de minimis benefit. This has allowed platforms like Shein and Temu to explode in popularity, at the cost of local players such as Amazon.
For lower-income customers, these de minimis purchases held a lot of value, as the products were cheaper, even though they came with a longer wait time. The price of food and alcoholic beverages is also expected to go up, as will the cost of appliances and most importantly, electric vehicles.
According to the government’s own data, the US collectively imported over $150 billion in motor vehicles and vehicle parts from Mexico last year, while Canada contributed $34 billion in motor vehicle imports.
But the impact will be felt across all four trading nations. “Intermediate goods—especially in motor vehicles—cross the borders multiple times before final assembly. The imposition of tariffs at each stage of fabrication would be disastrous,” says an analysis by the Peterson Institute for International Economics.
There is still a lot of uncertainty as to how the tariffs are going to unfold and how the cross-border dynamics will ultimately affect the sticker prices, but a trade war is certainly here and its inflationary effect will unfold in the immediate future.