Bracing for impact Tariffs may soon spike cost of cars, household goods, consumer tech A little pain: Trump finally admits tariffs heap costs on Americans. Ashley Belanger Feb 3, 2025 2:31 pm | 97 Canadian and American flags are seen at the US/Canada border March 1, 2017, in Pittsburg, New Hampshire. Credit: DON EMMERT / Staff | AFP Canadian and American flags are seen at the US/Canada border March 1, 2017, in Pittsburg, New Hampshire. Credit: DON EMMERT / Staff | AFP Story textSizeSmallStandardLargeWidth *StandardWideLinksStandardOrange* Subscribers only Learn moreOver the weekend, President Trump issued executive orders heaping significant additional tariffs on America's biggest trading partners, Canada, China, and Mexico.To justify the tariffs"a 25 percent additional tariff on imports from Canada and Mexico and a 10 percent additional tariff on imports from China"Trump claimed that all partners were allowing drugs and immigrants to illegally enter the US. Declaring a national emergency under the International Emergency Economic Powers Act, Trump's orders seemed bent on "downplaying" the potential economic impact on Americans, AP News reported.But very quickly, the trade policy sparked inflation fears, with industry associations representing major US firms from many sectors warning of potentially derailed supply chains and spiked consumer costs of cars, groceries, consumer technology, and more. Perhaps the biggest pain will be felt by car buyers already frustrated by high prices if car prices go up by $3,000, as Bloomberg reported. And as Trump eyes expanding tariffs to the European Union next, January research from the Consumer Technology Association showed that imposing similar tariffs on all countries would increase the cost of laptops by as much as 68 percent, game consoles by up to 58 percent, and smartphones perhaps by 37 percent.With tariffs scheduled to take effect on Tuesday, Mexico moved fast to negotiate a one-month pause on Monday, ABC News reported. In exchange, Mexico promised to "reinforce" the US-Mexico border with 10,000 National Guard troops.The pause buys Mexico a little time to convince the Trump administrationincluding Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and potentially Commerce Secretary nominee Howard Lutnickto strike a "permanent" trade deal, ABC News reported. If those talks fall through, though, Mexico has indicated it will retaliate with both tariff and non-tariff measures, ABC News reported.Even in the best-case scenario where no countries retaliate, the average household income in 2025 could drop by about $1,170 if this week's new tariffs remain in place, an analysis from the Budget Lab at Yale forecast. With retaliation, average income could decrease by $1,245.Canada has already threatened to retaliate by imposing 35 percent tariffs on US goods, although that could change, depending on the outcome of a meeting this afternoon between Trump and outgoing Prime Minister Justin Trudeau.Currently, there's seemingly tension between the Trump administration and Trudeau, however.On Saturday, Trudeau called Trump's rationale for imposing tariffs on Canadawhich Trudeau noted is responsible for less than 1 percent of drugs flowing into the US"the flimsiest pretext possible," NBC News reported.This morning, the director of the White House's National Economic Council, Kevin Hassett, reportedly criticized Canada's response on CNBC. While Mexico is viewed as being "very, very serious" about Trump's tariffs threat, "Canadians appear to have misunderstood the plain language of the executive order and they're interpreting it as a trade war," Hassett said.On the campaign trail, Trump promised to lower prices of groceries, cars, gas, housing, and other goods, AP News noted. But on Sunday, Trump clearly warned reporters while boarding Air Force One that tariffs could have the opposite effect, ABC News reported, and could significantly worsen inflation the longer the trade policy stands."We may have short term, some, a little pain, and people understand that, but, long term, the United States has been ripped off by virtually every country in the world," Trump said.Online shoppers, car buyers brace for tariffsIn addition to imposing new tariffs on these countries, Trump's executive orders also took aim at their access to the "de minimus" exemption that allows businesses, including online retailers, to send shipments below $800 into the US without being taxed. That move could likely spike costs for Americans using popular Chinese retail platforms like Temu or Shein.Before leaving office, Joe Biden had threatened in Septemberto alter the "de minimus" rule, accusing platforms like Temu or Shein of flooding the US with "huge volumes of low-value products such as textiles and apparel" and making "it increasingly difficult to target and block illegal or unsafe shipments." Following the same logic, it seems that Trump wants to exclude Canada, China, and potentially Mexico from the duty-free exemption to make it easier to identify illegal drug shipments.Temu and Shein did not respond to Ars' request to comment. But both platforms in September told Ars that losing the duty-free exemption wouldn't slow their growth. And both platforms have shifted business to keep more inventory in the US, CNBC reported.Canada is retaliating, auto industry will sufferWhile China has yet to retaliate to defend such retailers, for Canada, the tariffs are considered so intolerable that the country immediately ordered tariffs on beverages, cosmetics, and paper products flowing from the US, AP News reported. Next up will be "passenger vehicles, trucks, steel and aluminum products, certain fruits and vegetables, beef, pork, dairy products, aerospace products, and more."If the trade wars further complicate auto industry trade in particular, it could hurt US consumers. Carmakers globally saw stocks fall on expectations that Trump's tariffs will have a "profound impact" on the entire auto industry, CNBC reported. And if tariffs expand into the EU, an Oxford Economics analysis suggested, the cost of European cars in the US market would likely increase while availability decreases, perhaps crippling a core EU market and limiting Americans' choice in vehicles.EU car companies are already bracing for potential disruptions. A spokesperson for Germany-based BMW told CNBC that tariffs "hinder free trade, slow down innovation, and set a negative spiral in motion. In the end, they are detrimental to customers, making products more expensive and less innovative." A Volkswagen spokesperson confirmed the company was "counting on constructive talks between the trading partners to ensure planning security and economic stability and to avoid a trade conflict."Right now, Canada's auto industry appears most spooked by the impending trade war, with the president of Canadas Automotive Parts Manufacturers Association, Flavio Volpe, warning that Canada's auto sector could "shut down within a week," Bloomberg reported."At 25 percent, absolutely nobody in our business is profitable by a long shot," Volpe said.According to Bloomberg, nearly one-quarter of the 16 million cars sold in the US each year will be hit with duties, adding about $60 billion in industry costs. Seemingly the primary wallet drain will be car components that cross the US-Canada and US-Mexico borders "as many as eight times during production" and, should negotiations fail, could be getting hit with tariffs both ways. Tesla, for example, relies on a small parts manufacturer in Canada, Laval Tool, to create the molds for its Cybertruck. It already costs up to $500,000 per mold, Bloomberg noted, and since many of the mold components are sourced from Canada currently, that cost could go up at a time when Cybertruck sales already aren't great, InsideEVs reported.Tariffs necessaryWilliam Reinsch, senior adviser at the Center for Strategic and International Studies and a former US trade official, told AP News that Trump's new tariffs on raw materials disrupting the auto industry and others don't seem to "make much economic sense.""Historically, most of our tariffs on raw materials have been low because we want to get cheaper materials so our manufacturers will be competitive ... Now, whats he talking about? Hes talking about tariffs on raw materials," Reinsch said. "I dont get the economics of it."But Trump has maintained that tariffs are necessary to push business into the US while protecting national security. Industry experts have warned that hoping Trump's tariffs will pressure carmakers to source all car components within the US is a "tough ask," as shifting production could take years. Trump seems unlikely to back down any time soon, instead asking already cash-strapped Americans to be patient with any rising costs potentially harming businesses and consumers."We can play the game all they want," Trump said.But to countries threatening the US with tariffs in response to Trump's orders, it likely doesn't feel like a game. According to AP News, the Ministry of Commerce in China plans to file a lawsuit with the World Trade Organization for the "wrongful practices of the US."Ashley BelangerSenior Policy ReporterAshley BelangerSenior Policy Reporter Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience. 97 Comments