California and its exports could be the target of retaliatory tariffs from Canada and China following President Donald Trump's new tariffs on those countries and Mexico, economists say. Trump announced Monday that the tariff delay on both countries was over, and a 25% tax on imports from both countries would go into effect starting Tuesday. He also doubled tariffs on some Chinese goods to 20%. Tariffs imposed on goods from Mexico and Canada are expected to raise the price of goods used by Californians every day. For items such as gas, alcohol, and meat, economists expect Americans to pay higher prices. "No room left for Mexico or Canada," Trump said Monday. “The tariffs – they are all set. They’re going into effect tomorrow.” The three countries make up the U.S.'s biggest trading partners, which Trump has acknowledged could cause "some pain" to American consumers. "The ultimate effect of US tariffs and retaliatory measures on California’s economy is hard to predict; it will depend on how sizeable they are and whether they are broad-based or target certain products," the nonpartisan Public Policy Institute of California reported.
How will the tariffs against Mexico and Canada affect California?
The Golden State imports 2.7 times more goods than it exports, the nonprofit reported. In California, manufactured goods dominate the state's exports at 87% or $159 billion. These include computer equipment, semiconductors, instruments, to aerospace products, and parts. California also leads the nation in agricultural exports of $15 billion with products such as nuts, processed and fresh fruits, and processed vegetables, which is important revenue for California farmers, the Public Policy Institute of California states. Oil and gas are California's fifth largest imports, with $26 billion, representing 5.3% of total imports. The three countries, Mexico, Canada, and China, account for 37% of California's exports and 41% of its imports, the nonprofit found. "In 2024, California exported $65 billion in manufactured and agricultural goods to these nations while importing $187 billion in manufactured goods from them—China provided nearly 30% of all manufacturing imports," the Public Policy Institute of California states. "The Golden State also imported $9 billion in agricultural goods from the three countries (52% of all agricultural imports), primarily from Mexico."
What Canadian items could be impacted by tariffs?
What Mexican items could be impacted by tariffs?
Canada and Mexico are the United States’ largest trading partners. A large amount of meat, grains, and vegetables is imported from both countries. About 34% of all meat imported into the U.S. comes from Canada, according to the
Canadian government . According to the USDA, Mexico is a major provider of fresh vegetables, with 77% of the fresh produce coming into the U.S. from the South. Both countries rank within the top four providers of alcohol for the United States. According to the U.S. Beer Institute, Mexico is the largest importer of beer into the United States, with 18% of all beer consumed in America coming from the country.
Gas and car prices to increase
According to Mike Skordeles, head of U.S. economics at
Truist , Trump initially proposed a 10% tariff on Canadian oil, roughly a 16-cent increase per gallon. “This is a mess,” Skordeles said. “There are so many unintended consequences.” “You might see prices go up not just for new cars but for used ones, too, as any additional scarcity in the market often drives more would-be new shoppers to consider used cars,” Cars.com’s Stef Schrader told USA TODAY. “Cars that depend heavily on imported parts or are fully imported from the affected countries will likely see price hikes first.”
What are tariffs?
Tariffs are a form of taxes imposed on imports from another country. According to the Tax Foundation, economists generally agree that trade barriers increase consumer prices and negatively impact economic output and income. Tariffs create a demand for domestic manufacturers, but the same companies are also part of the global supply chain, which is also impacted by tariffs, experts have previously told USA TODAY. Trump's motivation behind the tariffs on the three countries is to curb the flow of migrants and illegal drugs into the U.S., something he has insisted that the countries have not done enough to address the issues. Mexico and Canada agreed to do more for the border when the tariffs were first announced in February to delay them for a month. China and Canada announced retaliatory tariffs against the U.S., while Mexican President Claudia Sheinbaum said she plans to announce Mexico's retaliatory tariffs and other measures against the U.S. on Sunday.
Who pays for tariffs?
Usually, tariffs are charged as a percentage of the price a buyer pays a foreign seller for the goods. American company importers pay tariffs, with the money going to the U.S. Treasury. Companies typically pass higher costs on to consumers through higher prices. The tariffs imposed by Trump “could raise consumer prices on everyday retail purchases, such as food and beverage items and general merchandise, covering about a quarter of the total consumption basket, by 0.81 percent to 1.63 percent," a Federal Reserve Bank of Atlanta study states. The Peterson Institute for International Economics states that the tariffs could cost the average United States household $1,200 annually. “Domestic producers that compete with the newly tariffed imports will increase their prices in line with import price increases,” the institute said. The Tax Policy Center said after-tax income would fall by $930 on average next year. With the lowest income, 20% of households would lower after-tax income by $170, and wealthier households could see an average of $3,280 less in a year.
Contributing: USA TODAY's Bart Jansen, Kinsey Crowley, and Jonathan Limehouse.
