American consumers and businesses are bracing for a financial hit as former President Donald Trump announced that tariffs on imports from Canada and Mexico will take effect this Saturday. While the move is aimed at protecting U.S. industries, the economic ties between the three North American nations run deep—so much so that the impact is expected to ripple across multiple sectors, driving up the cost of everything from cars and gasoline to groceries and alcohol.
With North American trade surpassing U.S.-China commerce—totaling $1.8 trillion in 2023 compared to $643 billion with China—these tariffs could significantly disrupt supply chains and increase prices for millions of American consumers.
The Auto Industry: Higher Prices and Potential Job Losses
One of the hardest-hit sectors will be the auto industry, which relies heavily on integrated supply chains that cross U.S., Canadian, and Mexican borders multiple times before a finished vehicle reaches American consumers.
According to S&P Global Mobility, more than one in five cars and light trucks sold in the United States in 2023 were built in either Canada or Mexico. Last year, the U.S. imported:
$69 billion worth of cars and light trucks from Mexico—more than from any other country.
$37 billion worth of cars and trucks from Canada.
$78 billion in auto parts from Mexico.
$20 billion in auto parts from Canada.
Major U.S. automakers like Ford, General Motors, and Stellantis (Chrysler’s parent company) depend on cross-border supply chains. The engines in the Ford F-Series pickups and the iconic Mustang, for example, come from Canada. Parts such as seats, transmissions, and electronics often cross the border multiple times before reaching assembly plants in the U.S.
A 25% tariff on these imports would be a massive disruption. Auto industry analysts predict that most, if not all, of these increased costs will be passed down to consumers. The average new car price could rise by $3,000, according to TD Economics, making it even harder for Americans to afford a vehicle.
The used car market wouldn’t be spared either. With new car prices climbing, demand for used cars would increase, pushing those prices up as well. The average used car, already costing $26,000, could see significant price hikes.
Beyond price increases, the auto industry warns that tariffs could lead to job losses. If manufacturing costs rise too high, companies may cut production or even shift jobs overseas, undermining the very goal of the tariffs.
Pain at the Pump: Gas Prices Could Spike
Another major concern is oil. Canada is America’s biggest foreign supplier of crude oil, providing $90 billion worth of crude last year—far outpacing Mexico, which supplied $11 billion.
Unlike general consumer goods, oil is difficult to replace. Many American refineries are specifically designed to process the heavier crude from Canada, rather than the lighter crude produced domestically through fracking. If Trump moves forward with tariffs on Canadian and Mexican oil, refineries won’t have many alternative sources, leading to potential gas shortages and price spikes.
Experts estimate that tariffs on North American oil could push U.S. gasoline prices up by 30 to 70 cents per gallon. That would put further strain on American households already dealing with inflation and high transportation costs.
The Midwest could be particularly hard hit, as many refineries in the region rely heavily on Canadian crude. Drivers in states like Michigan, Ohio, and Illinois might see some of the steepest price hikes.
A Sobering Reality for Spirits and Cocktails
For those who enjoy a glass of tequila, whisky, or mezcal, the tariffs could deliver another financial punch.
In 2023, the U.S. imported:
$4.6 billion worth of tequila from Mexico.
$108 million in mezcal from Mexico.
$537 million worth of Canadian spirits, including $202.5 million in whisky.
Because tequila and Canadian whisky are legally protected as "distinctive products" (meaning they can only be produced in their country of origin), U.S. distillers can’t replace them with domestic alternatives. Instead, prices for these beverages will likely rise, hurting bars, restaurants, and consumers.
This comes at a time when the U.S. spirits industry is already facing the potential of a 50% tariff on American whiskey from the European Union, which is set to take effect in March. The Distilled Spirits Council warns that tariffs on North American imports could trigger even more retaliatory actions from Canada and Mexico, leading to further losses for the U.S. beverage industry.
Chris Swonger, CEO of the council, emphasized that tariffs could devastate the hospitality industry, which is still recovering from the pandemic. “At the end of the day, tariffs on spirits products from our neighbors to the north and south are going to hurt U.S. consumers and lead to job losses,” he warned.
Grocery Prices on the Rise: Avocados, Fruits, and Vegetables at Risk
For Americans still struggling with high grocery prices, the tariffs could be another blow. In 2023, the U.S. imported more than $45 billion in agricultural products from Mexico—including:
63% of all imported vegetables (like tomatoes, peppers, and cucumbers).
47% of imported fruits and nuts (such as avocados, limes, and berries).
Canada also supplies $40 billion worth of farm products, including grains, dairy, and meat.
Since grocery stores operate on razor-thin margins, retailers likely won’t absorb the extra costs. Instead, consumers will pay the price at checkout. The impact could be particularly painful for fresh produce like avocados, which overwhelmingly come from Mexico. With the Super Bowl around the corner, tariffs could lead to what some are calling the "Guacamole Tax," raising the cost of America’s favorite game-day snack.
Farmers Fear Retaliation
U.S. farmers have their own worries. In previous trade disputes, foreign nations have retaliated by imposing tariffs on American agricultural exports. During Trump’s first term, China and other countries responded to U.S. tariffs by targeting soybeans, corn, and pork—hurting American farmers.
To offset the damage, Trump’s administration spent billions of taxpayer dollars compensating farmers for lost sales. Some, like Nebraska farmer Mark McHargue, appreciated the aid but preferred open trade.
“We would rather get our money from the market,” McHargue said. “It doesn’t feel great to get a government check.”
If history repeats itself, U.S. farmers could once again be caught in the middle—facing higher costs on equipment and supplies while also losing international buyers for their crops.
The Bottom Line: Consumers Will Pay the Price
While tariffs are often framed as a tool to protect American jobs, history shows that the costs are often passed down to consumers. If Trump moves forward with these tariffs, Americans could soon see:
More expensive cars (up by $3,000 or more).
Higher gas prices (by 30 to 70 cents per gallon).
Increased alcohol prices (especially for tequila and whisky).
Steep grocery costs (hitting avocados, fruits, and vegetables hardest).
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