US Tariffs on Canada, Mexico, and China Expected to Impact Key Industries

The tariff placed on Canada, Mexico, and China would likely raise prices for US consumers. (Mark Abramson / NYTimes)   

On Feb. 1, the Trump Administration announced plans to impose a 25 percent tariff on all imports from Canada and Mexico, along with an additional 10 percent tariff on imports from China. The move affects several key industries, as the US imports 16 percent of its high-voltage switchgear and 100 percent of its utility poles from Canada, 32 percent of its low-voltage transformer equipment from China, and 36 percent of its high-voltage transformers from Mexico. The 25 percent tariff also applies to steel and aluminum imports, raising concerns about cost increases in manufacturing and infrastructure projects. 

President Donald Trump also outlined further tariff measures, including a 25 percent tariff on all auto imports, semiconductors, and pharmaceuticals set to take effect on April 2. 

Experts are already weighing in on the potential consequences of this new change. David Greene, an analyst at Cars.com, commented that if the 25 percent tariff on auto imports is enacted, consumers might see higher prices at dealerships. Given the reliance on imported materials in these sectors, these measures raise questions about the potential impact on the automobile and power industries

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor producer, has also expressed concerns. With the majority of its plants located in Asia, the policy could pose challenges for chipmakers and technology companies that depend on these imports.

In the same way, the pharmaceutical industry faces similar uncertainties. In 2023, the US imported approximately $176 billion of pharmaceuticals, primarily from Europe, India, and China. Ireland accounted for 20.4 percent of these imports, followed by Germany (10.8 percent), Switzerland (8.6 percent), India (6.2 percent), and China (3.4 percent). With pharmaceutical products being one of the European Union’s (EU’s) largest exports to the US, the new tariffs could have far-reaching effects on the sector.

Following the upcoming tariffs, car prices are also expected to continue rising, as most manufacturers source more than half of their vehicle components from other countries, including Canada and Mexico. Tariffs on steel and aluminum—critical materials in vehicle production—could also drive up costs for US-made cars.

In addition, S&P Global Mobility has confirmed that half of the 10.4 million vehicles produced in US auto plants in 2024 will come from European or Asian brands such as Honda, BMW, and Mercedes. The Commerce Department reported the US imported $217 billion worth of passenger vehicles last year, with Mexico accounting for one-fifth, followed by Japan, South Korea, Canada, and Germany.

European automakers are planning ahead of this tariff and begin transferring major plants into the US to avoid the heavy impact expected to hit on foreign carmakers. In 2023, Europe exported 800,000 vehicles to the US, with 73 percent of its car exports directed to the US market. Additionally, pharmaceutical products are among the largest exports of the European Union to the US. In 2024, the US imported $127 billion of pharmaceuticals from the EU. Given the scale of these industries, the new tariffs could have broad economic implications for European manufacturers and exporters.

The US relies heavily on imports to supply its industries, and the tariffs would likely have a huge impact on these businesses. US Department of Commerce; US Geological Survey, Mineral Commodity Summaries / Council on Foreign Relations 

The US continues to rely heavily on foreign imports of steel and aluminum, and the anticipated cost increases are expected to impact multiple industries, including aerospace, automotive, construction, and energy. As industries brace for the impact, the long-term effects of these tariffs remain uncertain. Analysts will watch closely to see how businesses and global trade partners respond in the coming months.