- Experts Warn of Up to $1 Per Gallon Gasoline Hike If Tariffs Take Effect
- Food, Auto, and Alcohol Prices Likely to Rise as Trade Costs Increase
U.S. Tariffs on Mexico and Canada Could Lead to Higher Gas and Grocery Prices, Experts Warn
The Biden administration’s plan to impose 25% tariffs on all goods imported from Mexico and Canada could lead to significant price hikes on gasoline, groceries, and automobiles, experts have told ABC News.
Set to take effect on February 1, the tariffs would impact trade with two of the United States’ largest trading partners, raising concerns that American consumers will bear the brunt of increased costs as importers pass expenses down the supply chain.
Experts warn that products ranging from tomatoes to tequila and auto parts could see sharp price increases, potentially disrupting markets across the country.
“The scary thing is the list of products is very, very long,” said Jason Miller, a supply-chain management professor at Michigan State University.
Gas Prices Could Soar by $1 Per Gallon
Mexico and Canada account for 70% of U.S. crude oil imports, fueling refineries that produce gasoline distributed across the country. Analysts suggest that tariffs on crude oil from Canada, in particular, could push gas prices up between 40 and 70 cents per gallon in regions reliant on Canadian imports, such as the Upper Midwest and both coasts.
“You could definitely be looking at 50 cent-a-gallon increases in a lot of parts of the country,” said Timothy Fitzgerald, a petroleum industry expert at the University of Tennessee.
Compounding the issue, seasonal demand spikes in spring could add another 30 cents per gallon, bringing potential gas price increases to $1 per gallon if the tariffs remain in place, Fitzgerald added.
Grocery Bills at Risk: Tomatoes, Avocados, and Beer Among Key Imports
Mexico remains the largest supplier of fresh fruits and vegetables to the U.S., exporting over $38.5 billion in agricultural goods in 2023, including avocados, tomatoes, limes, cucumbers, and bell peppers. With Mexico supplying 90% of avocados consumed in the U.S., experts warn of inevitable price increases if tariffs are enacted.
“It would be difficult for the U.S. to replace these goods with domestic production or alternative suppliers,” Miller explained.
Beer and tequila are also likely to see price spikes. In 2022 alone, the U.S. imported $26 billion worth of alcoholic beverages from Mexico.
“Don’t forget all that beer we import from Mexico,” Miller noted.
Auto Industry Faces Disruptions as Costs Rise
The automobile industry, which relies heavily on cross-border trade, would be significantly affected. Canada and Mexico accounted for nearly $120 billion worth of vehicle imports in 2023, making up nearly half of all U.S. auto imports.
“The operations of auto companies on both sides of the border will be hugely affected by these tariffs,” said Robert Lawrence, a trade and investment professor at Harvard University’s Kennedy School of Government.
Tariffs as a Political Lever?
While the potential price increases are concerning, some experts suggest that the tariffs may never take effect. Former President Donald Trump previously used tariff threats as leverage in trade negotiations, and some believe this move could be a similar tactic.
In response for comment, a White House spokesperson defended Trump’s past economic policies, stating, “In his first administration, President Trump instituted an America First economic agenda of tariffs, tax cuts, deregulation, and an unleashing of American energy. In his second administration, President Trump will again use tariffs to level the playing field and usher in a new era of growth and prosperity for American industry and workers.”
