Key Takeaways:

• U.S. businesses are facing new tariffs of 25% on imports from Canada and Mexico and 10% on those from China.
• Experts estimate an annual cost increase of $1,000 to $1,200 for the average American household due to these tariffs.
• Many companies are hoarding inventory to mitigate immediate impacts but foresee long-term inflation and cost challenges.

Washington — American businesses, from ice cream parlors in California to medical supply companies in North Carolina, are bracing themselves for significant cost increases following President Donald Trump’s recent announcement of tariffs on imports from America’s three largest trading partners: Canada, Mexico, and China. The new levies, which will take effect soon, include a 25% tariff on goods from Canada and Mexico and a 10% tax on products from China. Canadian energy sources like oil and natural gas will see a lower tax rate of 10%, while Mexico’s government has already responded with plans for retaliatory action, with reports indicating that Canada intends to impose matching tariffs on up to $155 billion of U.S. imports, as detailed by AP News. Economists are warning that these tariffs could have substantial impacts on the U.S. economy. The Budget Lab at Yale University has estimated that the average American household could see a decrease in purchasing power amounting to between $1,000 and $1,200 annually. Furthermore, Gregory Daco, chief economist at EY, indicates that consumer price inflation, which was already at an annual rate of 2.9% in December, might rise by an additional 0.4 percentage points due to these tariffs. Daco projects that the economy, which grew by 2.8% last year, may contract by 1.5% this year and 2.1% by 2026, as increased costs undermine consumer spending and business investment. At the Penny Ice Creamery in Santa Cruz, California, co-owner Zach Davis is concerned about the rising costs of essential supplies. Already grappling with inflation, he has had to hike prices for popular flavors including “strawberry pink peppercorn” and “chocolate caramel sea salt.” “We were looking forward to inflation coming down… Now with the tariffs, we may be back at it again,” said Davis. The tariffs may heavily impact costs for equipment and supplies sourced from China, which include everything from refrigerators to sprinkles imported from Canada. Businesses like Davis's, which operate on thin margins, might find it challenging to remain profitable when forced to pass on additional costs to consumers. The situation is similarly worrisome for medical supply firms like Aeroflow Health in Asheville, North Carolina. CEO Casey Hite expressed deep concern about rising costs stemming from tariffs on the over half of their materials sourced from China. With pre-determined reimbursement rates from insurers, Hite states that these taxes would either force his company to purchase lower-quality items or shift higher expenses onto patients in the form of increased health premiums. “It will impact the patients,” he noted, indicating that the burden would eventually flow down to consumers. William Reinsch, a former U.S. trade official with the Center for Strategic and International Studies, remarked that many businesses have attempted to stockpile inventory in anticipation of these tariffs, but this measure is only a short-term solution. “Once that inventory starts to get low, we’re going to start feeling the effects,” warned George Carrillo, CEO of the Hispanic Construction Council, who is already seeing construction businesses hoarding materials. Provincial vendors like Rod Sbragia, who works in Nogales, Arizona, fear the consequences of these tariffs on the food distribution market. “It would be detrimental to the American consumer, to the choices they have at the supermarket,” he warned. While many farmers and agricultural businesses are often politically aligned with Trump, they too are vulnerable to jump in costs and retaliatory tariffs that could affect their profits severely, reminiscent of challenges faced during his previous term. With farmers relying on support from the Trump administration to offset potential losses, there is anxiety about how these structural economic changes will unfold. “The Trump administration provided a safety net,” noted Lee Wicker of the North Carolina Growers Association, highlighting the precarious position of producers reliant on foreign labor and international markets. In the face of the new tariffs and the corresponding economic changes imminent on the horizon, many U.S. businesses and consumers will be watching closely, as the fight for competitiveness in the global market evolves once again. For more information, visit the original articles from South China Morning Post and Los Angeles Times.