The tariffs that President Donald Trump is imposing on Canada, China, and Mexico, the three largest U.S. trading partners, could cost the average American household $1,200 a year at a time when many are desperate for lower prices after years of inflation eating away at their bank accounts.
Trump slapped additional 10% duties on imports from China and 25% levies on goods from Canada and Mexico over the weekend (the exception is a 10% tariff on Canadian oil). Canada has already responded with 25% tariffs on a variety of American goods, including groceries and alcohol, and Mexico and China have also promised retaliation. The tariffs are scheduled to take effect Tuesday, though Mexican President Claudia Sheinbaum announced a one-month reprieve for the country on Monday.
A number of reports have found these tariffs—which are paid by U.S. businesses that import foreign goods—could cost Americans hundreds if not thousands of dollars a year, as businesses pass on the additional costs. The Budget Lab at Yale University estimates the average U.S. household will lose $1,200 in purchasing power in the near-term and $1,000 long-term, while the right-leaning Tax Foundation puts the immediate impact at more than $830 this year. Another analysis from the Tax Policy Center found the tariffs on Canada and Mexico alone would cost $930 in 2026.
That’s because a range of consumer goods could see prices spike, including gas, electronics like computers and tablets, cars, clothing, furniture, beer, groceries, and more.
“The resulting surge in U.S. inflation from these tariffs and other futures measures is going to come even faster and be larger than we initially expected,” writes Paul Ashworth, chief North America economist at Capital Economics.
Some of the most vulnerable U.S. companies include Nvidia, Intel, General Motors, Ford, Stellantis, Constellation Brands, and many more, according to analysts from Goldman Sachs.
This isn’t the first time Trump has levied tariffs that have hit American households: After he imposed tariffs on China during his first term, multiple studies found “the costs of the U.S. tariffs continue to be almost entirely borne by US firms and consumers.” The Tax Foundation called that “one of the largest tax increases in decades.”
Trump has said the tariffs are necessary in part to curb immigration and the flow of fentanyl over the border, and that Americans will have “short term some little pain” as a result.
But as “U.S. seizures of the drug on the northern border amounted to a trivial 43 lbs in the whole of last year, it’s clear this is just a pretext,” Ashworth writes. “We don’t expect any deal that sees these tariffs removed any time soon, although it’s possible that more sectors could be added to the exemption.”
Trump has also promised additional tariffs will “definitely happen” on imports from the European Union, and a universal tariff could come in April.
All of that could cause inflation to rise above 3% this year, writes Ashworth. “Any chance of more interest rate cuts this year just died,” he says.
Analysts have noted that even if the tariffs are temporary, that Trump imposed them at all signals to other countries that the U.S. will not honor trade agreements it has already signed.
The tariffs “challenge our underlying view that the Trump administration will strive to limit disruptive policies,” a team of JP Morgan Chase economists wrote in a note Monday. “In short, the risk is that the policy mix is tilting (perhaps unintentionally) into a business-unfriendly stance.”
