US President Trump’s 25% tariffs against all imports from Canada and Mexico are set to begin as soon as Saturday, February 1.
Trump and the Republican Party have promised that their trade policies will benefit US workers. “As Tariffs on Foreign Producers go up, Taxes on American Workers, Families, and Businesses can come down,” reads the 2024 Republican Party platform. On the first day of Trump’s presidency, he issued a memorandum ringing in his “America First Trade Policy”—claiming to establish a program that “benefits American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.”
The Mexican auto industry has been a primary target, with Trump threatening 200% tariffs on Mexican vehicle imports. This is in line with Trump’s “America First” promises to save the US auto industry, a sector of the working class that has indeed been decimated by neoliberal trade policy alongside the broader manufacturing sector. Right-wing politicians such as Trump have notoriously made lofty promises and appeals to this sector of workers in particular, referencing the auto industry’s centrality to the US economy in its heyday.
According to some experts, Trump’s tariffs would add thousands to the cost of purchasing vehicles—not only those shipped to the US, but those manufactured in the US that utilize Canadian or Mexican parts. In 2023, the total value of goods imported from Canada and Mexico was USD 893 billion, with the largest share of goods coming from machinery and transport equipment, oil, and petroleum products. Canada is the largest supplier of agricultural products to the US, and Mexico is the third largest, behind the European Union.
Working families bear the burden
Tariffs are taxes on imports of goods coming from other countries, with most of the cost burden falling on the companies who import the goods. In order to maintain a healthy profit margin, these companies pass these costs onto consumers in the form of higher prices. These higher prices disproportionately impact the people of the US, with even more of an impact on lower income families, who spend a larger portion of their income on basic goods than wealthy families.
Trump campaigned on a promise of lowering prices for “the American people,“ who had been struggling under a massive inflationary and cost of living crisis during Biden’s administration.
In choosing who to vote for during the November 2024 presidential election, polls showed that US voters were looking for a solution to rising prices across the board. According to AP VoteCast, a survey of over 120,000 registered voters conducted from October 30 to November 5, 96% of these voters said “high prices for gas, groceries and other goods” factored into who they voted for—an election in which the Democratic Party lost the popular vote for the first time in 20 years.
With his tariff plans, Trump seems to already be going back on his promise to tackle the cost of living crisis. Trump himself claimed in an interview a month after being elected that he couldn’t “guarantee” that his tax on imported goods wouldn’t raise prices for working class people.
“Can you guarantee American families won’t pay more?” asked Kristen Welker of NBC’s “Meet the Press?”
“I can’t guarantee anything. I can’t guarantee tomorrow. But I can say that if you look…just pre-COVID, we had the greatest economy in the history of our country,” Trump said in response.
According to an analysis by the Institute on Taxation and Economic Policy (ITEP), which examined Trump’s proposal for a 60% tariff on goods imported from China and a 20% tariff on goods imported from other countries, the poorest fifth of people (those making up to USD 28,600 annually) in the US would see their cost of living increase several percentage points more as compared to the middle fifth and the richest 1%. This is because lower-income households spend a larger portion of their budget on basic goods, such as food, rent, and other necessities of life. When prices go up, it is the poor, not the rich, that bear the burden.
According to US Census data, the cost of living in the US is already an overwhelming crisis for the majority of the population. The Census’ “Household Pulse Survey” from August 20 to September 16 reveals that approximately 69% of people polled (around 250 million) have had some difficulty affording basic household expenses each week. Over 93% of those polled had some level of stress over the last two months’ price increases, with over 45% reporting they found these price increases to be “very stressful”.
While tariffs will cause working families to suffer under increased prices, “the supposed benefits of tariffs often fail to materialize for workers,” according to Javier Lopez, a professor at Columbia’s Graduate School of Architecture, Planning and Preservation. “While some specific industries might see temporary job protection, the broader effects of higher prices and reduced trade typically lead to job losses in other sectors. The steel tariff that ‘saves’ one worker’s job can lead to layoffs at companies that use steel when their costs rise and sales decline.”
Trump’s empty promises
A key element of Trump’s policies are that they will generate jobs in the manufacturing sector, a section of the US working class that has been ravaged by neoliberal trade policy.
“This new American industrialism will create millions and millions of jobs, massively raise wages for American workers, and make the United States into a manufacturing powerhouse like it used to be many years ago,” Trump had promised on the campaign trail.
But these promises might soon be broken. “The closest you can get if you’re honest is to say that the tariff may protect jobs in the industry subject to the tariff,” economist Richard Wolff told Peoples Dispatch. “But all the other industries affected by the tariff will be in trouble, they will have less business, they will lay off workers.”
Regarding Trump’s lofty promises, “honest political leaders cannot and do not talk that way,” according to Wolff.
The real motivation behind tariffs
If one takes Trump’s promises to lower prices and create jobs at face value, tariffs seem like a faulty solution. Given the likelihood that tariffs will in fact raise prices, what is the real reason Trump has proposed this policy? According to journalist Eugene Puryear, Trump’s trade policies are connected to a larger trade war against China and other nations.
Trump’s threats are intended “as an extension of proposed tariffs on China, since both Mexico and Canada are often interconnected with supply chains and capital flows that ‘begin’ in China,” Puryear told Peoples Dispatch. Other potential motivations include tariffs “as a form of leverage to wrangle concessions out of both countries on any issue of concern,” and “as a further inducement (really threat) to companies from anywhere who may be subject to such tariffs to move their investments more into the United States to avoid any potential turmoil from Trump’s tariff policy,” Puryear elaborated.
Puryear predicts that “the overall struggle over these issues is likely to be intense, particularly as working class people demand a reduction in the cost of living, which is highly unlikely under Trump’s tariff policy.”
