There has been a lot of conversation among people who understand economics much better than I about President Trump's imposing tariffs on countries with whom we trade. I think the question is "how will they affect us here in the mid-west in the coming months?".
When it comes to buying products from other countries who pays what? Let's look at the world of trade before the tariffs on Canada, Mexico and China were imposed yesterday. These three countries account for more than a third of the products brought into the United States.
Any time a company in a foreign country, including Canada and Mexico, sells a product to a company in the United States, the U.S. company is responsible for paying import taxes and duties. A duty encompasses other fees in addition to taxes. These duties are calculated based on the value of the imported goods. Duties vary according to the product’s value, type, and necessity to the domestic market. They aim to protect local industries by making imported goods less competitive. https://traderiskguaranty.com/trgpeak/comprehensive-guide-us-import-taxes-tariffs/ Tariffs, on the other hand, are more specific types of duties applied to goods from particular countries, often for a set period, and are used as tools in trade policy to exert economic influence or respond to trade disputes. Both impact the final cost of goods and international trade dynamics.
So, if U.S. companies have to pay these taxes and tariffs, why would that upset Mexico, China or Canada? If importers do not want to absorb the cost of the tariff themselves, they can try to force the supplier who sold them the goods to lower their prices to make up for the tariff. Instead of buying a product from Mexico, for example the company may look for a country that produces that product for either a cheaper rate or with less taxes and duties.
The White House has released a document explaining their reasoning for imposing the new tariffs on top of the agreed taxes on goods and services is because of "The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA)." (https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/) Without the declaration of a national emergency, the President could not impose tariffs because of an already negotiated and agreed upon trade agreement. "The United States, Mexico, and Canada updated NAFTA (North American Free Trade Agreement) to create the USMCA (United States, Mexico, Canada Agreement). USMCA is mutually beneficial for North American workers, farmers, ranchers, and businesses. The agreement, which entered into force on July 1, 2020, created a more balanced environment for trade, supports high-paying jobs for Americans, and grows the North American economy." (https://www.trade.gov/usmca).
As of this writing the Canadian government has responded by imposing new tariffs on goods from the United States coming into Canada at the same 25% level. The trade war begins. I cannot predict what Mexico or China will do and promised you I would not speculate or put my own feelings here on the blog.
I do encourage you to read both the White House document and watch this video from Canada (https://apnews.com/article/trump-tariffs-canada-mexico-retaliation-trudeau-sheinbaum-70e067b092a3af72c2eb7ca37d532c91). This is really pretty complex economics and I am anything but an economist.
Other articles I recommend reading:
https://apnews.com/article/trumps-tariffs-canada-mexico-china-taxes-910cf9a18fce654597a30dbaaa8d1576
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