FEAR OF INFLATION | Cost of average American household purchases likely to go up, may force consumers to opt for lower quality goods

AP WASHINGTON

From an ice cream parlor in California to a medical supply business in North Carolina, US businesses are bracing for the impact of President Donald Trump's new tariffs on imports from Canada, Mexico and China – America’s three largest trading partners.

The levies—25% on Canadian and Mexican goods and 10% on Chinese imports—take effect Tuesday. Canadian energy, including oil, natural gas, and electricity, will be taxed at a lower 10% rate. Mexico’s president immediately announced retaliatory tariffs, while Canada’s Prime Minister said his country would impose matching 25% tariffs on up to $155 billion in US imports.

The Budget Lab at Yale University estimates these tariffs will cost the average American household between $1,000 and $1,200 annually. Gregory Daco, chief economist at EY, projects they will increase inflation by 0.4 percentage points this year and slow economic growth from 2.8% last year to 1.5% in 2025 and 2.1% in 2026.

The Penny Ice Creamery in Santa Cruz, California, has repeatedly raised prices as inflation increased supply costs. Co-owner Zach Davis said, "We were looking forward to inflation coming down, the economy stabilizing in 2025 ... Now with the tariffs, we may be back at it again."

In Asheville, North Carolina, Casey Hite, CEO of Aeroflow Health, expects his company to take a hit. More than half of its medical supplies, including breast pumps, come from China. Since insurers pay Aeroflow at pre-negotiated rates set before Trump’s tariffs, the company faces tough choices: buy cheaper, lower-quality products or pass higher costs onto consumers through increased insurance premiums. "It will impact the patients," Hite said. "In time, patients pay more for the products."

William Reinsch, a former US trade official now with the Centre for Strategic and International Studies, noted that some businesses stocked up on imported goods ahead of time, temporarily shielding consumers. But George Carrillo, CEO of the Hispanic Construction Council, warns inflation could spike in three to six months once inventories deplete. "Once that inventory starts to get low, we're going to start feeling the effects," Carrillo said.

Industries without the luxury of stockpiling, such as supermarkets, will see immediate price hikes as farm products spoil quickly. Grocery shelves will reflect the tariffs within days.

American farmers, one of Trump’s biggest  voters,  may also bear the brunt of  the  trade battle. During his first term, countries like China retaliated against his tariffs with levies on US agricultural products, including soybeans and pork. To counter the losses, Trump spent billions in taxpayer money to compensate farmers for lower sales and falling prices. With new tariffs in place, history may repeat itself—leading to higher prices for businesses and consumers alike.