Americans are under cost pressure when taxes with Canada, China increases

From March 4, all Mexican and Canadian goods entered the US to bear the new import tax. Accordingly, energy from Canada will be imposed on 10%tax. This item from Mexico is taxable 25%. Other products from the two countries were over 25%.

Besides, all Chinese goods will bear an additional 10%, bringing the total additional tax to 20%. These tax rates cover the two -way trade flow worth nearly US $ 2,200 billion per year.

China immediately reacted and announced an additional 10% -15% tax on some US imported goods from March 10. At the same time, the country also added 15 US businesses to the list of export restrictions.

Canada also responded to 25% tax with 30 billion US CAD, about 1,256 products affected. 21 days, taxes with 125 billion CAD US goods are also valid. Mexico, meanwhile, said it would publish the detailed retaliation policy on March 9, raising the risk of warriors in North America, according to CNN.

Experts say that imposing taxes on products from Mexico, Canada, China can have a deeper impact on the US economy, which depends heavily on imports to supply consumer goods and raw materials and production.

Accordingly, the supply chain is adding more cost benefits and passive in planning. Jay Foreman, CEO of Basic Fun toy company! The company has just started responding to the 10% tax that Mr. Trump applied to all goods imported from China last month. An additional 10% additional time makes the company facing the cost of up to 5 million USD.

The reason is about 90% of Basic Fun toys! Made in China. According to Foreman, they are forced to carry all tax expenses to 2026 because the contracts have been signed with customers. “All our plans to deal with 10% tax are not feasible if the tax rate doubled,” he said.

In Mr. Trump’s ideal prospect, tax increases will make companies like Basic Fun! transfer production lines to the US. But according to Foreman, this is not financially feasible. China has outstanding advantages in labor force, costs and production capacity in the toy industry. “There are things that cannot be made in the US and toys are one of them,” he explained.

Even if it is possible to transfer production to the United States, Foreman said that the retail price increased sharply. “A child doll costs $ 10 will increase to $ 30. Is that what consumers want?”, He said.

Chipotle fast food chain is also cautious with new tax rates. CEO Scott Boatwright plans to burden the extra cost from taxes and keep the selling price. “We do not know if these tax rates are temporary or will become a long -term policy under the new government,” he said. They do not exclude the possibility of price increase if the tariffs cause “serious challenges”.

A transport equipment supplier revealed to the Institute of Supply Management (ISM) that their customers are postponing new orders due to uncertainty on tax policy. “The government does not give clear instructions on how to deploy, making the forecast impact on business more difficult,” they said.

Tariff policies can also negatively affect American consumers’ psychology. Because the price of escalation at the time of inflation is still higher than the target of the Federal Reserve (Fed). This can prevent Fed from lowering interest rates, making the problem of living expenses more difficult.

Conference Board’s consumer confidence index has dropped 11 points in the past two months, the largest adjustment level at the same time since 2009. While the consumer psychological index measured by the University of Michigan, recorded a 9 -point reduction in the same period, the strongest since 1978.

Candace Laing, CEO of Canadian Chamber of Commerce, claims that the tariff will not bring “golden era” as Mr. Trump expects. In contrast, it interrupts the supply chain, increasing costs for manufacturers and consumers. “Tariffs are essentially a direct tax on American,” she said.

Challenges with businesses, consumers raise concerns about growth in investors. The Fed Atlanta’s GDPNOW model forecasts that GDP will decrease by 2.8% in the first quarter, significantly changing compared to the previous 2.3% increase.

It is forecasted to turn to negative after the gloomy consumer spending information in January has been released recently. Consumer spending accounts for about two -thirds of the US economy, so the decline in this field can have a great impact on GDP. In addition, the authorities in the beginning of this week also show that spending on weak construction and an important indicator measurement of production activities also decreased.

However, it was too early to conclude whether this gloomy economic prospect is a temporary phenomenon or sign of a serious recession. In the past, the US economy has repeatedly overcome the worry of recession, such as the 2022 period when the Fed raised interest rates to curb inflation and in the summer of 2024, the time the unemployment rate increased.

Ed Yardeni, President of Yardeni Research, is optimistic that the worry is only a temporary phenomenon, mainly due to abnormal cold weather and policy uncertainty from the Washington government. “This is the stage of slowdown and I don’t think it lasts. I bet on the intrinsic endurance of the US economy and the ability to overcome the instability from the Trump administration 2.0,” he said.

However, Yardeni also noted that instead of starting a trade war, Mr. Trump should negotiate with Canada and Mexico. “Tariffs are a double -edged sword. Don’t be too deep into it,” he warned.