WASHINGTON (AP) 鈥� From an ice cream parlor in California to a medical supply business in North Carolina to a T-shirt vendor outside Detroit, U.S. businesses are bracing to take a hit from the taxes on imports from Canada, Mexico and China 鈥� America鈥檚 three biggest trading partners.
The levies of 25% on Canadian and Mexican and 10% on Chinese goods will take effect Tuesday. Canadian energy, including oil, natural gas and electricity, will be taxed at a lower 10% rate.
Mexico鈥檚 president immediately ordered retaliatory tariffs and Canada鈥檚 prime minister said the country would put matching 25% tariffs on up to $155 billion in U.S. imports.
China鈥檚 Ministry of Foreign Affairs said the country鈥檚 government firmly opposes the move and will take "necessary countermeasures to defend its legitimate rights and interests.鈥� The Ministry of Commerce in China said it would file a lawsuit with the World Trade Organization for the 鈥渨rongful practices of the U.S.鈥�
The Budget Lab at Yale University estimates Trump's tariffs would cost the average American household $1,000 to $1,200 in annual purchasing power.
Gregory Daco, chief economist at the tax and consulting firm EY, calculates the tariffs would increase inflation, which was running at a 2.9% annual rate in December, by 0.4 percentage points this year. Daco also projects the U.S. economy, which grew 2.8% last year, would fall by 1.5% this year and 2.1% in 2026 鈥渁s higher import costs dampen consumer spending and business investment.鈥欌��
The Penny Ice Creamery in Santa Cruz, California, has had to hike prices of its ice cream, including popular flavors 鈥渟trawberry pink peppercorn鈥欌�� and 鈥渃hocolate caramel sea salt,鈥欌�� repeatedly in recent years as an inflationary surge increased the cost of its supplies.
鈥淚 feel bad about always having to raise prices,鈥欌�� co-owner Zach Davis said. 鈥淲e were looking forward to inflation coming down, the economy stabilizing in 2025 ... Now with the tariffs, we may be back at it again.鈥欌��
Trump tariffs, Davis said, threaten to drive up the cost of the mostly made-in-China refrigerators, freezers and blenders he鈥檒l need if Penny Ice Creamery goes ahead with plans to add to its six shops. He still has painful memories of the extra equipment costs the company had to absorb when Trump slapped massive tariffs on China during his first term.
The new tariffs will also raise the price of a customer favorite 鈥� sprinkles 鈥� which Penny Ice Creamery imports from a company in Whitby, Ontario. Tacking a 25% import tax on even something as small as that can damage a small business like his.
鈥淭he margins are so slim,鈥欌�� he said. 鈥淏eing able to offer that add-on can maybe generate an additional 10 cents in profit per scoop. If a tariff wipes that out, that can really be the difference between being profitable and being break-even and even being underwater by the end of the year.鈥欌��
In Asheville, North Carolina, Casey Hite, CEO of Aeroflow Health, expects to take a hit because his company gets more than half its supplies, including breast pumps, from Chinese manufacturers, providing them to American patients through insurance plans. Aeroflow Health gets paid by insurers at pre-negotiated rates, put in place before Trump decided on his tariffs.
Hite said the tax on Chinese imports would hit the company鈥檚 finances, forcing it either to purchase cheaper and lower-quality products or pass higher costs along via higher health insurance premiums. Those might take two years to materialize, Hite said, but eventually they would hit consumers鈥� budgets.
鈥淚t will impact the patients,鈥� Hite said. 鈥淚n time, patients pay more for the products.鈥�
Even the made-in-USA absorbent incontinence pads Aeroflow Health buys aren鈥檛 safe from Trump鈥檚 import taxes. They may include pulp from tariff target Canada and plastics and packaging from China, according to the Aeroflow Health, which warns of 鈥渢urbulences鈥� from the tariffs.
鈥淚s this going to affect our business? You bet it is,鈥欌�� said Linda Schlesinger-Wagner, who owns skinnytees, a women鈥檚 apparel company in Birmingham, Michigan, north of Detroit, that imports clothing from China. She said the 10% tax would increase her costs, though she plans to absorb the extra expense instead of passing it along to customers.
鈥淚 don鈥檛 like what鈥檚 going on,鈥欌�� she said, referring to the broader impact of the tariffs. 鈥淎nd I think people are going to be truly shocked at the pricing they鈥檙e going to see on the cars, on the lumber, on the clothes, on the food. This is going to be a mess.鈥欌��
William Reinsch, a former U.S. trade official now with the Center for Strategic and International Studies, said that many companies that stocked up on imported goods ahead of time to avoid the tariffs. They will be able to draw on their piled-up inventories for weeks or a couple of months, delaying their customers鈥� pain.
George Carrillo, CEO of the Hispanic Construction Council, an industry advocacy group, said construction companies have been hoarding materials in anticipation of Trump鈥檚 actions, but he worries about the possibility of inflation spiking in three to six months.
鈥淥nce that inventory starts to get low, we鈥檙e going to start feeling the effects,鈥� Carillo said in a phone interview Saturday, ahead of the announcement. 鈥淒evelopers and general contractors need to keep up with the pace and they鈥檙e going to start buying more products and it鈥檚 going to be at a higher price point.鈥�
All that will be exacerbated by an emerging immigration crackdown that is already spooking the construction industry鈥檚 labor pool, he said.
鈥淵ou put tariffs and you put workforce instability, it鈥檚 going to create major delays in projects. It鈥檚 going to create an increase in prices because of the lack of availability,鈥� Carrillo said.
Then there are the industries that don't have the luxury of stockpiling, including supermarkets whose farm products will spoil. So the tariff impact will show up on grocery shelves within days.
鈥淵ou don鈥檛 stockpile avocados,鈥欌�� Reinsch said. 鈥淵ou don鈥檛 stockpile cut flowers. You don鈥檛 stockpile bananas.鈥欌��
In the tomato trading hub of Nogales, Arizona, produce vendor Rod Sbragia, who followed his father into the business nearly four decades ago, worries that the import levies will force some distribution companies out of business and 鈥渨ould be detrimental to the American consumer, to the choices they have at the supermarket.鈥�
Sbragia voted for Trump in the past three elections and calls himself a 鈥渟taunch Republican.鈥� The president, he said, must not have been properly advised on the matter.
鈥淲hen we鈥檙e worried about cost to consumers, inflationary pressures and the overall health of our population,鈥欌�� he asked, 鈥渨hy are we going to make it more difficult to get access to fresh fruits and vegetables?鈥�
American farmers are also likely to get caught in Trump鈥檚 trade tussle with Canada, China and Mexico. The president鈥檚 supporters in rural America make a tempting target for retaliatory tariffs. That is what happened in Trump鈥檚 first term when other countries, notably China, slapped back against the president鈥檚 tariffs with levies of their own on things like soybeans and pork. In response, Trump spent billions in taxpayer money to compensate them for lost sales and lower prices.
Many farmers are now counting on the president to come through and protect them from reprisals.
鈥淭he Trump administration provided a safety net,鈥� said former tobacco grower Lee Wicker, deputy director of the North Carolina Growers Association, a collection of 700 farms that lawfully brings in foreign temporary laborers to work the fields through a federal visa program. Many of the association's farmers 鈥渢rust him that he鈥檚 going to take care of anybody who鈥檚 hurt by the tariffs, and that鈥檚 really all that we can ask for.鈥�
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Associated Press staff writers Mae Anderson and Cedar Attanasio in New York; Mike Householder in Birmingham, Michigan; Gary Robertson in Raleigh, North Carolina; Gabriel Sandoval in Phoenix; and Didi Tang and Christopher Rugaber in Washington, D.C., contributed to this story.
Paul Wiseman, The Associated Press
