Canadian Minister of Energy and Natural Resources Jonathan Wilkinson discusses the potential influence of tariffs, energy exports, energy federations in the USA and the upcoming Canadian elections.
President Donald Trump Tariff’s announcement on Mexico and Canada, although delayed for at least a month, could encourage the increase in prices that consumers pay for products affected by tariffs if they are eventually implemented.
Trump announced last weekend that 25% of tariffs, which are tax on imported products, will enter into force on products from Canada and Mexico in force 4. February – as well as 10% of 10% of tariffs on Canadian energy products. Canada and Mexico threatened retaliation tariffs in response to Trump’s Tariff plans.
The President reached an agreement with Canada and Mexico to delay the tariff at least one month after two countries announced measures to combat the smuggling of fental and illegal immigration across the US border.
While Tariffs to Canada and Mexico So far, they are on hold, their potential implementation in the future leaves an open possibility that US consumers can face higher prices for certain products if they eventually enter into force.
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President Donald Trump has announced the tariffs as a negotiating tool and a source of tax revenues. (Chip Somodeville / Getty Images / Getty Images)
“Assuming in the next month or so, tariffs on Mexico and Canada get into force, you will see that prices are becoming higher on a lot of goods,” said Dan Savickas, Vice President of Politics and Government Affairs in the Taxpayers’ Federation, Fox Job said .
Scott Lincicome, Vice President of General Economics and Trade Policy at Cato Institute, said in an interview with Fox Business that “three large areas for potential Consumer pain They would be food, energy and cars. “
“We import the tone of fresh seasonal products on food, as well as beers … meat and several other things from Mexico,” he explained. “These are perch items that you cannot supply and in the case of avocados, are not really appropriate replacements either in the US or abroad. Since food in the US have very low profit margins, you would inevitably see any kind of any kind of The species of tariffs, say, just switched to the consumer of Mexican avocado – there is nowhere else to go. “
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Avocado are among Mexico products that could see a price increase if the tariffs enter into force. (Camilo Freedman / Bloomberg via Getty Images / Getty Images)
Lincicome explained that auto industry is more complex, with suppliers and manufacturers in the US, Canada and Mexico consisting of a North American supply chain.
“Your apply tariffs In these things, you effectively provide some kind of significant increase in car producers in all three countries, and then the question is how much is being transmitted, “Lincicome explained.” Between $ 1,000 and $ 6,000 on a new car and again, there is something that manufacturers can absorb – of course, with less investment and employment and production in the process. “
“We import so much oil From Canada, and that is a kind of raw oil that we don’t really make in the US, it’s a heavy raw. Certain refineries, especially in the Middle West and Mountain West, are designed to process this type of raw oil, and they cannot really treat the light raw oil that they now make cheap or easy, “he explained.
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Tariffs to the interconnected chain of North America’s supply could result in higher prices of new cars. (Michael Tercha/Chicago Tribune/Tribune News Service via Getty Images/Getty Images)
Lincicome added that price increases on devices such as washing machines, washing machine dishwasher and air conditioning that were made in three countries.
Other products that Savickas noted could increase prices due to tariffs include wood and associated products with regard to the amount of Canadian wood that import the United States as well as Mexico tomato products.
Brandon Parsons, an economist at Graziadio Pepperdine University of Business School, told Fox Business that his research suggested Consumer Price Index (CPI)A popular measure of inflation, it could increase by 1.3 percentage points if the tariffs are conducted.
In view of that CPI was 2.9% in DecemberIt could push inflation above 4% – a level double from the target of the federal reserve. Parsons said that for an average household, this CPI increase by 1.3% is likely to increase the costs by around $ 1000, and these costs could be increased relatively quickly in some cases.
“Assuming these tariffs go by in a month, I would expect the food prices to increase relatively soon,” Parsons explained. “Certain products like avocado, maybe it would be a few weeks, maybe even before in other cases.”
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Gas prices can grow if the tariffs are imposed on the import of Canadian raw oil. (Sven Hoppe / Picture Alliance via Getty Images / Getty Images)
Given the energy prices, Parsons said his research showed that it was Gas prices It could rise by 70 cents as a result of a tariff on the Canadian raw oil, even if she is a cutter from a lower tariff rate of 10%. He added that the retaliation between the US -a Canada could encourage that increase even more.
Alex Durante, a senior economist in the Tax Foundation, told Fox Business, “since these tariffs are targeting a wider selection of goods, for example, such as agriculture, companies will have less adaptation margin, so that consumers will ultimately have a burden in terms of higher prices .
Durante added that in the future it could be considered a less credible trade partner in terms of tariff threats Canada and Mexico – two largest American trading partners who are a party An agreement on the American-Mexico-Kanada (Usmac) who was negotiating Trump during his first term.
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“Now they are also standing to lose further credibility, because when we have signed in the USMac, it is part of this obligation not to impose tariffs in violating that agreement,” he explained. “So, on the whole, not only will our economy be worse because of the tariff, but I think it will now have more difficulties in dealing with free trade agreements in the future.”
