OKLAHOMA CITY (KFOR) — President-elect Donald Trump has promised to impose import tariff’s on items from Mexico, Canada and China starting on his first day in office. But what exactly does that mean for the American consumer? An expert economist weighed in for a breakdown on that topic.
"Oh, prices will go up,” said Dr. Travis Roach, associate professor and Department of Economics Chair at the University of Central Oklahoma. “Tariffs would not work to support domestic industry unless prices went up. That is the mechanism by which they work."
Roach said Trump’s talk of an across-the-board 25 percent tariff on imports from Mexico and Canada and an additional 10 percent for imports from China will have its effects on the American consumer.
"This most recent bout of inflation, inflation peaked at around 8 percent,” he said. “So, that means this is four times worse of guaranteed inflation just through Trump's decided tariff policy."
A tariff is a tax placed on any import coming into the country. Roach said about 50 percent of our imports are made up from those three countries.
Technology, clothing and petroleum are among them. The U.S. refines Canadian petroleum and about 60 percent of our gasoline comes from Canada originally.
It can also impact your food, too. About 90 percent of avocado’s sold in the U.S. come from Mexico and it’s nearly the same number for tomato’s.
"They will be either not be on the shelves of the stores or will suddenly be 25, 50 percent more expensive than they were just a week ago,” he said.
In the Sooner State, Roach said we export about $2.5 billion in goods to Canada and Mexico alone, which brings up the topic of retaliation.
"Suppose these countries decide to retaliate with their own tariffs, that harms our own firms and industries within the state,” he said.
Price hikes generally happen quickly, according to Roach. It can also affect smaller businesses as well.
"This is economic policy that, you know, every party can agree is not helpful to the U.S. economy,” he said.
It is unclear if the tariff’s are a plan or just a negotiating tactic, but a majority of experts concur that higher tariff’s generally equate to higher prices.
