How will tariffs affect grocery prices, gas prices, the stock market and more

WASHINGTON - President Donald Trump’s new tariffs on imports from Canada and China will go into effect on Tuesday, while the planned tariffs on Mexico are on hold for a month. The move places duties of 10% on all imports from China and 25% on imports from Canada. If tariffs ultimately go forward on Mexico, imports would be taxed at 25% as well.

The move fulfills a campaign promise but has also sparked reciprocal actions that could signal an extended trade war with key trading partners.

Will the stock market crash?

Concerns over President Donald Trump's tariffs are impacting U.S. stocks Monday, as financial markets worldwide drop on fears of a potential trade war. The S&P 500 fell 1.4% in early trading, mirroring losses in stock markets across Asia and Europe. The Dow Jones Industrial Average dropped 435 points, or 1%, by 9:35 a.m. Eastern time, while the Nasdaq composite declined by 1.8%.

The market downturn affected a wide range of assets, from bitcoin to the Mexican peso, not just U.S. companies expected to be hit hardest by Trump's tariffs. On Wall Street, Big Tech and other companies vulnerable to higher interest rates experienced some of the sharpest losses.

How will tariffs affect grocery prices?

There is growing concern that Trump's tariffs will lead to higher prices for groceries, electronics, and various other household expenses. This could put upward pressure on the U.S. inflation rate, which has been gradually slowing since its peak three summers ago.

Jason Moser from The Motley Fool says the risk is in the longer Trump's tariffs go on. "Mexico actually provides about half of the U.S. fresh produce imports annually. More than 80% of our avocados," he said. "You might want to stock up on some tequila. Certainly, consumer electronics, bigger ticket items like cars. I think that's one to think about too given how connected that supply chain is between Mexico, Canada and the U.S." Moser told FOX 5 on Monday. "I think the risk is on the longer this goes on, then we start seeing those price increases, perhaps we see supply chain interruption," he added.

The Associated Press said that in 2023, the U.S. bought more than $45 billion in agricultural products from Mexico – including 63% of imported vegetables and 47% of fruits and nuts. Agricultural imports from Canada that same year came to $40 billion.

U.S. farmers are nervous that Canada and Mexico will retaliate by placing tariffs on American products such as soybeans and corn.

The flags of the United States, Canada and Mexico.

How will tariffs affect gas prices?

FOX Business says Americans in the Midwest, Rockies and Great Lakes regions should brace for gas price hikes. Energy expert Patrick De Haan warned that motorists in the Great Lakes could see gas prices shooting up in excess of $0.20 a gallon. He said a lot of Canadian crude oil flows directly down into areas like the Great Lakes, the Midwest, and the Rocky Mountains regions. He said it may be difficult to find alternate sources of crude oil in those areas.

How will tariffs affect auto production?

U.S. car prices could rise by around $3,000 according to the Associated Press. Auto companies rely on supply chains that cross U.S., Mexico, and Canadian borders. The Associated Press says more than one in five of the cars and light trucks sold in the United States were built in Canada or Mexico. In 2023, the United States imported $69 billion worth of cars and light trucks from Mexico – more than any other country -- and $37 billion from Canada. Another $78 billion in auto parts came from Mexico and $20 billion from Canada.

China is also a major supplier of auto parts to the U.S. A report from S&P Global Mobility calculated that "importers are likely to pass most, if not all, of this (cost) increase to consumers." TD Economics noted that average U.S. car prices could increase by around $3,000.

How will tariffs affect the prices of computers, clothes and toys?

Tariffs on China could impact consumer goods like cell phones, computers, and other electronic devices – all of which were among the top imports from China last year. The U.S. also imported more than $32 billion in "toys, games and sporting goods" from China last year, according to the Associated Press. The AP also reports that billions of dollars a year in clothing is imported from China – including $7.9 billion in footwear.

How will tariffs affect prices of distilled spirits?

Tariffs could raise the price of spirits, especially tequila or Canadian whisky. According to the Associated Press, the U.S. imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico in 2023.

$537 million worth of Canadian spirits, including $202.5 million worth of whisky, was also imported that same year, the AP says. Canada and Mexico were also the second and third-largest importers of U.S. spirits in 2023.

Chris Swonger, president of the Distilled Spirits Council of the United States, told the Associated Press that any tariffs on spirits from Canada and Mexico would hurt U.S. consumers and lead to job losses across the U.S. hospitality industry.