Food, Gas, Prices to Spike if Trump Levies Tariffs on Canada and Mexico
The neighboring countries are major exporters of fresh food, auto, gas, and industrial supplies to the U.S.

President Donald Trump is using tariffs as a bargaining chip with the United States' top trading partners. Chances are it’ll hurt your wallet.
After slamming Mexico and Canada with 25% tariffs two days ago, the Trump administration narrowly evaded a trade war on Feb. 3, 2025, after reaching a deal with the neighboring countries' leaders.
Mexico and Canada are two of the United States’ top trading partners. Aside from the European Union, comprised of 27 sovereign nations, Mexico is the largest source of all U.S. imports.

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Economists warn that tariffs on China, Mexico, and Canada can impact the cost of everyday essentials like food, gas, and clothing. It'll also put upward pressure on inflation, which appeared to be cooling.
Here’s where you could see prices rise sooner than you think, beginning with a quick recap of where things stand with the trade war.
Key Points
- Trump reached a deal with Mexico’s President Claudia Sheinbaum Pardo and Canada's Prime Minister Justin Trudeau, agreeing to a 30-day delay on tariffs as long as they reinforce border security.
- The Trump administration had levied steep tariffs in retaliation for allowing illicit drugs and migrants to cross the border, the White House said.
- The U.S. also hit China with a unilateral 10% tariff on all imported goods on Feb. 1, 2025. The country just retaliated with 10% and 15% tariffs on targeted U.S. imports and a lawsuit. China's duties will be levied as soon as Feb. 10.
China retaliates against unfair tariffs
The Trump administration imposed blanket 10% tariffs on all Chinese imports to the U.S. on Feb. 1, and now all bets are off.
China announced that it will impose 15% tariffs on imports of coal and liquified natural gas from the United States in retaliation for the Trump administration’s 10% duty on Chinese goods.
The Chinese government also announced another series of targeted 10% tariffs on U.S. imports of crude oil, agricultural machinery, and certain vehicles. These tariffs go into effect on Feb. 10, 2025.
Additionally, the Chinese Ministry of Commerce filed a lawsuit against the United States for allegedly violating the World Trade Organization’s (WTO) rules. The complaint claims that Trump’s 10% unilateral tariff increase on Chinese imports to the U.S. undermines the economic and trade cooperation between the two countries.
“China firmly opposes the U.S. approach and urges the U.S. to immediately correct its wrong practices,” the commerce ministry said in a statement.
Trump is reportedly to speak with Chinese President Xi Jinping “soon” over China’s retaliatory tariffs. This story is developing.
Tariff pause: Canada and Mexcio to ramp up border security
Meanwhile, President Claudia Sheinbaum of Mexico and Trump reached a deal to pause 25% tariffs on Mexico imports to the U.S. on Feb. 3. Sheinbaum is to send 10,000 national guards to the border to prevent the flow of illegal migrants and illicit drugs to the U.S., mainly fentanyl.
Furthermore, Trump said in a social media post that the U.S. would continue negotiations with Mexico over border security. Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick would continue discussions.
Outgoing Canada Prime Minister Justin Trudeau also reached a deal with President Trump on Feb. 3 that would pause 25% tariffs on Canadian imports for one month. In exchange, Canada would reinforce the border to stop the flow of fentanyl and illegal migrants to the country.
The development comes after a heated weekend, with Trudeau warning that Canada would respond immediately to Trump's tariffs.
The retaliatory measures would have included a 25% tariff on $155 billion worth of U.S. goods. Canada's tariffs would have been enacted on Feb. 4 on $30 billion worth of goods, the rest would be collected in three weeks. Trudeau said this would allow Canadian companies and supply chains to "find alternatives."
The result would raise gas prices at the pump, everyday groceries, and even auto parts and cars.
Food prices could spike across the board
Prices in the grocery aisle could leave you with a bad taste, and a potential trade war would have worsened it. The cost of food is currently 25% higher than pre-COVID levels, the Food Industry Association said, and it doesn’t seem to be easing anytime this year.
Mexico and Canada are two of the United States’ top trading partners, according to Wells Fargo. Aside from the European Union, comprised of 27 sovereign nations, Mexico is the largest source of all U.S. imports.
To start, Mexico is the largest supplier of fresh fruit and vegetables to the U.S., responsible for 92% of all agricultural imports to the country, according to the latest government data. It’s also a major supplier of distilled spirits, per the International Food Policy Research Institute.
A potential 25% tariff on Mexico will cause the cost of fresh vegetables, fresh fruit and berries, baked cereals, and avocados to rise.
Yes, that means your strawberries will be costlier come Valentine's Day.
Outgoing Canadian Prime Minister Justin Trudeau said U.S. consumers will pay more if Trump imposes tariffs on Canadian goods. For Trudeau, nothing is “off the table” as the country is considering putting retaliatory tariffs on beverages like Florida orange juice and other goods if Trump imposes 25% tariffs on all Canadian imports. The list may go on.
According to the U.S. Department of Agriculture, Canada is a major supplier of essentials on your grocery list. Just to name a few: baked goods, cereals, pasta, vegetable oils, beef products, live animals, chocolate, and other grain products are imported from Canada.
The price of vehicles could rise significantly
Purchasing a car or auto parts will become even more expensive if tariffs are levied on Canada and Mexico.
The steep tariffs would interrupt supply chains from the auto industry causing the spike in prices, Wells Fargo analysts warned. Canada and Mexico are considered top exporters of automotive parts and vehicles to the U.S.
Prices for U.S.-made automobiles could rise as much as $2,100 once tariffs are imposed, Fortune first reported. Additionally, vehicles manufactured completely in Canada and Mexico may cost as much as $8,000 to $10,000 more.
Hardest hit companies include some of the biggest U.S carmakers — General Motors (GM), Ford, and Stellantis. All three have manufacturing plants in Mexico and Canada and could stand to lose between $5 to $9 billion.
Some GM vehicles manufactured in Mexico include the Chevrolet Blazer, Chevy Equinox, and Cadillac Optiq, all made in the Ramos Arizpe plant. There’s also the Chevy Equinox EV.
As Kiplinger reported, electric vehicles may also be hit by a separate Trump policy that aims to eliminate up to $7,500 federal tax credit for EV purchases.
Gas prices to rise in the U.S.
Prices as the gas pump would rise more than expected under Trump's 25% tariffs on Canadian imports.
Canada is a main source of crude oil imports and industrial supplies like steel for the United States. More than 71% of U.S. crude oil imports were supplied by Canada and Mexico in 2023, according to a new report from the Congressional Budget Office (CBO). Of that share, 60% of oil came from Canada.
The steep 25% tariffs would impact consumer prices for gasoline, diesel fuel, and other petroleum products across the country. Some states will be more affected than others by tariffs, mainly the Midwest.
That’s bad news, given that gas prices are already on the rise due to seasonal patterns, and are slated to reach $3.50 per gallon by spring.
The premier of Ontario, Doug Ford has been more forthcoming about the implications of Trump’s tariffs, noting that Canada won’t remain complacent.
“We will cut off energy down to Michigan, over to New York State, and over to Wisconsin,” Ford said in a report by the Associated Press. “I don’t want this to happen.”
Proposed tariffs would lead to higher inflation
If you were expecting inflation to go down, tariffs won’t be the solution.
A new Wells Fargo report found that imposing 25% tariffs on all imports from Mexico and Canada on February 1, would lead to retaliation and result in slower domestic growth for the U.S. and higher consumer prices.
Model simulations show that the annual rate of consumer price inflation would be half a percentage point higher by the year-end if Trump’s tariffs were enacted. By comparison, GDP growth would fall by a full percentage point relative to the expected baseline this year.
Trump tariffs bottom line
Tariffs are set to be an overarching theme during the Trump administration’s second term, and economists warn it may have collateral damage on your wallet.
As reported by Kiplinger, prices of everyday goods will spike if steep tariffs are enacted. The U.S. imported nearly $500 billion worth of merchandise from Mexico, and $410 billion from Canada in the twelve months leading up to November 2024.
While Canada and Mexico account for just under 30% of all U.S. goods imports, its categories are crucial for the United States. Auto parts and manufactured vehicles, crude oil, and fresh foods and vegetables are some areas that may be hard hit by Trump's 25% tariffs.
Economists say Trump’s tariff proposal will ignite a trade war, which will cause U.S. consumer prices to increase and impact Canada and Mexico’s economies. So far, Canada and Mexico's leaders have responded with retaliatory measures.
As reported, tariffs levied on foreign nations are paid by U.S. importers. That means a 25% tariff on Canadian goods will be paid by the U.S.-based importer, and that cost is generally passed to consumers like you so businesses can make a profit.
The U.S. Mexico-Canada Agreement (USMCA) is set to be reviewed next year, these tariff discussions may just speed up that timeline.
Stay informed, as these looming changes can impact your wallet.
Related Content:
- Tariffs Could Make Your Shopping Pricier in 2025
- Tariffs: What They Are and How They Impact Your Wallet
- Is Trump Taking the EV Tax Credit Away? What You Need to Know
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Gabriella Cruz-Martínez is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. Before joining Kiplinger as a tax writer, her in-depth reporting and analysis were featured in Yahoo Finance. She contributed to national dialogues on fiscal responsibility, market trends and economic reforms involving family tax credits, housing accessibility, banking regulations, student loan debt, and inflation.
Gabriella’s work has also appeared in Money Magazine, The Hyde Park Herald, and the Journal Gazette & Times-Courier. As a reporter and journalist, she enjoys writing stories that empower people from diverse backgrounds about their finances no matter their stage in life.
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