Some of President Donald Trump’s proposed tariffs are on pause, but that hasn’t halted concerns about the potential impact.
Businesses and economists warn consumers could see price increases for a range of items should Trump’s 25% tariffs on goods from Mexico and Canada go into effect.
Both were put on hold for at least 30 days after the two countries talked with Trump about his demands for help on immigration and drug trafficking.
“We may have short-term, a little pain and people understand that but long-term, the United States has been ripped off by virtually every country in the world,” Trump said Sunday night in defense of his plan.
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But Connecticut Food Association President Wayne Pesce said the state’s grocery stores get a lot of goods from those countries.
Canada exports beef and dairy products to the U.S., while Mexico is a major source of avocados, tomatoes, citrus fruits and other produce.
Even China processes or packages cocoa, some fish and other food products.
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A tariff is a tax paid by companies that import items into the U.S., but Pesce said grocery stores would be forced to pass any costs increases on to customers.
“We’re looking at a potentially 10 to 12% increase and what that might add to the bill you’re paying today,” Pesce said.
Those tariffs could be felt outside the grocery store, as well.
Canada provides a significant amount of lumber, raising concerns that a tariff could once again send home prices skyrocketing.
Auto manufacturers build vehicles in both Canada and Mexico, while advanced manufacturers in the U.S. get minerals from Canada.
“We can sell missionaries, we can sell aircraft parts and at the same time, we can buy things we do not get here,” Quinnipiac University professor Mohammad Elahee said.
Trump’s plan would also result in a 10% tariff on energy imported from Canada.
ISO-New England said 9% of the region’s electricity is imported from the country, and Gov. Ned Lamont (D-Connecticut) has suggested buying Canadian hydropower to meet Connecticut’s growing need.
“That will drive up electric costs that already has electric costs,” Lamont said. “Thanks a lot.”
Some supporters have suggested that tariffs could be a boom for the nation’s economy if people decide to buy U.S.-made goods instead.
Economists agree tariffs can help struggling businesses gain an advantage in the short term. They said tariffs in the long term drive up costs, though, and they doubted if domestic companies could meet the demand in this case.
They noted some of the businesses don’t have the capacity to do so without costly investments and long-term expansions.
“When it comes to investments, the greater the chaos in an environment, the greater the uncertainty, the greater there will be hesitancy to invest and solely pivot to the us,” University of New Haven professor Brian Marks said.