(WASHINGTON) — The Trump administration is set to impose tariffs on goods from Canada, Mexico and China on Saturday, placing pressure on three top U.S. trade partners while risking price increases for essential products like gasoline and groceries.
The policy is expected to slap a 25% tariff on all products from Canada and Mexico, as well as a 10% tariff on goods from China.
Hours before the tariffs were set to take effect, leaders in Canada and Mexico vowed to respond, indicating the possibility of a trade war.
Tariffs of this magnitude will likely increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers, experts previously told ABC News.
The policy could raise prices for an array of products ranging from avocados to tequila to auto parts.
The price impact remains unclear, however, since businesses within the supply chain could opt to take on some or all of the tax burden, some experts added.
Speaking at the White House on Friday, U.S. Press Secretary Karoline Leavitt said the tariffs target the three countries for hosting the manufacture and transport of illicit drugs that end up in the U.S.
“Canada, Mexico and China have all enabled illegal drugs to pour into America,” Leavitt said.
The sentiment echoed comments made by President Donald Trump when he proposed such tariffs in a post on Truth Social weeks after winning the November election.
“These are promises made and promises kept by the president,” Leavitt said.
Less than two hours after Leavitt addressed reporters, Canadian President Justin Trudeau said in a post on X that such tariffs would elicit a “forceful and immediate response.”
Speaking earlier in the day, Mexican President Claudia Sheinbaum cast doubt on the likelihood of tariffs. “We don’t believe that it will happen and if it does, we have our plan,” Sheinbaum said.
Mexico and Canada account for 70% of U.S. crude oil imports, which make up a key input for the nation’s gasoline supply, according to the U.S. Energy Information Administration, a government agency.
The tariffs could raise gasoline prices by as much as 70 cents a gallon for some drivers, Timothy Fitzgerald, a professor of business economics at the University of Tennessee who studies the petroleum industry, previously told ABC News.
Trump said at the Oval Office earlier this week that the tariffs may feature an exemption for oil. Such a move could mitigate the risk of a price hike for gasoline, but the inclusion of the exemption remained unclear a day before the tariffs were set to take effect.
When asked on Friday about a possible exemption for oil, Leavitt declined to directly respond. “I don’t have an update,” Leavitt said. “Those tariffs will be for public consumption in about 24 hours.”
The proposed tariffs could also raise the price of an array of fresh fruits and vegetables, including tomatoes, cucumbers, bell peppers, jalapenos, limes and mangoes, Jason Miller, a professor of supply-chain management at Michigan State University, told ABC News.
It would be difficult for the U.S. to replace those goods with domestic production or an alternative supplier, making it likely that prices would rise significantly if the tariffs take effect, he added.
The auto industry also retains deep ties to Canada and Mexico, making tariffs a threat to prices for cars and auto parts, experts said.
Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases have picked up in recent months, keeping inflation nearly a percentage point higher than the Fed’s target rate of 2%.
Speaking on Friday, Leavitt touted Trump’s previous achievements in keeping inflation under control.
“Americans who are concerned about increased prices should look at what President Trump did in his first term. He effectively implemented tariffs and the average inflation rate during the first Trump administration was 1.9%.”
ABC News’ William Gretsky contributed to this report.
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