SPOKANE, Wash — President-elect Donald Trump announced that he plans to charge Mexico, Canada and China a steep tariff on all their goods coming into the United States.
Trump said he'd impose a 25% tax on products entering the U.S. from Canada and Mexico, along with a separate 1% tariff on goods from China.
A tariff is an added tax or fee on imported goods that companies would pay and likely pass onto consumers.
So, what does that mean for you?
Gonzaga economics professor Ryan Herzog said assuming Trump goes through with the tariffs, their impact would then also depend on how the Fed responds.
"It's complex," Herzog said. "If the Fed does nothing, you are going to see [it], especially if you're in the Midwest [with] higher gas prices. You're going to see higher timber prices if you're in construction. You're going to see higher prices for the fruits and vegetables, mainly fruits that come in from Mexico, right? Your tomatoes and avocados. If you enjoy tequila, those are going to be certainly going up in price."
Herzog said if the tariffs cause inflation to start ticking up again, the Fed will likely start raising interest rates again, which of course, will have a ripple effect across the U.S. economy as borrowing costs would then go up again.
You can watch Mark Hanrahan's full interview with Herzog on KREM 2+ or down below:
The tariffs on foreign goods would include a price impact on items like food, clothing and automobiles. An owner of an auto repair shop in north Spokane said any further price increases would hurt his business after four years of prices already going up.
"You see things get a little bit more expensive," Brandon Barton, co-owner of Martin's Auto Services in north Spokane, said. "All the parts are made in Canada, Mexico and China, so, yeah, it's probably not going to be a good thing for our
Customers."
They are parts like brake rotors, which Barton said have already had a more than 50% increase.
"[It was} $28 two years ago, now, they're $48," Barton said. "Since they're steel, all we see is them going up again."
Over the past four years, Barton said the batteries he sells are now at $180 compared to $130. Oil changes they offer now are more than $100, and Barton said the price of labor has proven to be challenging.
"We got to keep the guys working, at least," Barton said. "We're still one of the lowest liberates in town. We're trying to stay that way."
Barton is trying to stay that way for his customers as a change in his and other businesses' prices could be on the way come January.
"It's doing our best [to] let them know, and most of our customers understand what's going on," Barton said.
Barton said he spoke with one of his suppliers on Tuesday, who told him if these tariffs go through, the prices at his auto shop are definitely going up.