Trump’s tariffs could rapidly raise prices. Which goods could cost Californians more?
Editor’s note: This story was originally published on Tuesday, March 4 Some information may now be outdated.
President Donald Trump imposed tariffs on goods from Canada, Mexico and China on Tuesday, causing stock markets to tumble and countries to immediately take retaliatory actions.
Shortly after midnight, Trump placed 25% tariffs on products from Mexico and Canada and doubled the tariff on Chinese imports to 20%, the Associated Press reported.
A 10% tariff on Chinese goods had been in place since early February.
U.S. stock markets plunged Monday shortly after Trump announced that the tariffs would be going into effect, The New York Times reported.
Here’s how the new tariffs could impact California consumers:
What do Trump tariffs mean for Canada, China and Mexico?
Tariffs are a tax imposed by governments on the value of imported goods, according to the International Trade Administration.
Trump previously threatened a 25% tariff on goods coming from Canada and Mexico that was set to start Feb. 4. Both nations in turn vowed to retaliate against Trump’s tariffs.
On Feb. 3, the day before tariffs on imports from Canada and Mexico were set to begin, Trump decreed a 30-day pause on the taxes in exchange for tighter border security and reduced drug trafficking.
However, the Trump administration went through with a 10% tariff on China on Feb. 4.
China quickly responded with retaliatory tariffs of its own on goods ranging from coal to farm machinery.
On Monday, about a month after tariffs were initially paused, Trump announced that he would go through with 25% taxes on goods from Canada and Mexico starting Tuesday.
In retaliation, Canadian Prime Minister Justin Trudeau said he would slap tariffs on more than $100 billion of U.S. goods if the taxes were still in place in 21 days.
Mexican President Claudia Sheinbaum said her country also plans to respond to the Trump administration tariffs, according to Reuters.
Trump announced Thursday that he would reverse tariffs on most goods from Mexico and Canada until April 2, the New York Times reported, delaying the taxes for a second time.
How could tariffs affect California consumers?
According to economic experts, massive tax increases on imported goods from Mexico, Canada and China could rapidly raise costs for U.S. consumers and businesses.
Even though Trump has claimed tariffs are paid by other countries, Americans are typically the ones stuck with paying higher prices.
Tariffs are paid by importers — U.S. companies — with the money going to the U.S. Treasury, according to international trade economist Matthew Cole.
“All consumers — California in particular — are going to face higher prices on a lot of goods,”said Cole, an associate professor at Cal Poly in San Luis Obispo.
Companies typically pass some costs onto consumers, resulting in higher price tags for products ranging from cars to lumber to grocery store staples, Cole said.
When tariffs were imposed on various imports in 2018 and 2019, prices for consumer goods increased across the country, according to the Public Policy Institute of California.
At the time, higher costs were largely paid by American consumers and businesses.
Cole predicted that there will be more inflation if tariffs remain in place, forcing the Federal Reserve to leave interest rates fixed as economic uncertainty piles up amid steep tariffs and a possible trade war.
If tariffs cause prices to quickly increase, wages for U.S. workers will struggle to adjust, Cole said, which could possibly result in mass layoffs.
“I could see a world where unemployment goes up in a non-trivial way,” he said.
Will food get more expensive for California residents?
Trump’s proposed tariffs could cause prices to shoot up for many major goods imported from Canada, China and Mexico.
In 2024, California imported $16 billion in Canadian goods and nearly $123 billion in Chinese products, according to the International Trade Administration.
Top imports included grain, bakery products and oil and gas from Canada, the trade group said, and computer equipment, household appliances and apparel from China.
California imported $64.3 billion of goods from Mexico in 2024, ranging from cars and trucks to avocados, bell peppers and tomatoes, the International Trade Administration said.
The Golden State imported more than $9 billion in motor vehicles and nearly $5 billion in fruits and tree nuts from Mexico in 2024, according to the trade organization.
Cole said he expects the price of agricultural products to increase now that tariffs are in effect.
The agriculture industry has limited market power, so businesses will be unable to take on the full cost of the tariff, he explained. The tax will then have to be passed off to the consumer.
“Margins are typically pretty small, so they don’t have a lot of room to absorb those types of tariffs,” Cole said.
Could cars cost more in California?
Cars could eventually get more expensive as a result of the tariffs, Cole said.
On Wednesday, Trump declared he would delay tariffs on cars and trucks coming from Mexico and Canada for one month.
After the delay, tariffs on the auto industry will start up again, White House Press Secretary Karoline Leavitt said.
Once the pause ends, vehicle parts will be slapped with a 25% tariff every time they pass over the Canada or Mexico border, Cole said, making the final product more costly to consumers.
“The whole production line that has been optimized to bring prices lower is now going to be disrupted,” he said.
Will tariffs increase home prices in California?
According to Cole, new tariffs could also cause California’s housing market to become even less affordable.
California imported more than $410 million in engineered wood products from Canada in 2024, according to the International Trade Administration.
The new 25% tariff on imports from Canada could cause materials and labor to increase, and that cost will likely be passed on to consumers, Cole said.
That could affect California residents trying to buy a house, complete a remodel or finish building construction.
“Things using timber, and lumber of sorts coming from Canada are going to get more expensive,” Cole said.
How much will prices increase?
It’s still to soon to say how much prices will jump up, according to Cole.
However, California consumers could begin to notice higher costs due to tariffs fairly soon.
“I would expect some of these price increases to happen within the next couple weeks,” the Cal Poly economist said.
Eventually, Californians could also have to pay more in taxes.
A new report by the nonpartisan Tax Foundation discovered that Trump’s proposed tariffs would amount to an average tax increase of more than $800 per U.S. household in 2025.
“We estimate the tariffs on Mexico, Canada and China proposed to go into effect ...would shrink economic output by 0.4% and increase taxes by $1.1 trillion between 2025 and 2034 on a conventional basis,” the Tax Foundation said.
This story was originally published March 4, 2025 at 5:17 PM with the headline "Trump’s tariffs could rapidly raise prices. Which goods could cost Californians more?."
