On Feb. 1, President Donald Trump ordered a 25% tariff tax on Canadian goods (10% on energy resources), 25% on Mexican goods and 10% on Chinese goods to take effect on Feb. 4. On Feb. 3, the president granted a one-month grace period to Canada and Mexico; the tariffs on China stand and are being met with retaliatory measures.
According to the White House, the added import taxes are an attempt to force the countries to enact measures to stop the flow of illegal immigration, fentanyl and other drugs from entering the United States. The administration’s announcements surrounding tariff enforcement measures seem to be quite fluid.
Tariffs can be punitive to the exporting country’s economy. Before passing the import taxes onto the end consumers, importers could look for alternative suppliers, reshore production to the U.S., order fewer quantities or negotiate lower prices to offset tariff costs. Costs that aren’t mitigated will likely be passed onto the U.S. consumer and could be inflationary.
Inflation does not hinge on tariffs from those three trading partners alone, but it’s not insignificant. The U.S. imported over $1.3 trillion in 2023 from the three countries, deriving $480 billion from Mexico, $430 billion from Canada and $427 billion from China, according to Trading Economics. The United States is the largest trading partner for all three countries.
So, what do tariffs have to do with your plans for retirement?
You can read the full article by Senior Portfolio Manager, Director of ESG Strategies Andy Drennen in the Springfield Business Journal. Shared with permission from the Springfield Business Journal.
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