CLEVELAND — President Donald Trump says 25% tariffs on imports from Mexico and Canada will start Tuesday, sparking renewed fears of a North American trade war. Trump said from the White House Monday that he would also add on another 10% tariff on goods from China, on top of the initial 10% he put in place last month.
The president said the tariffs are to force the two U.S. neighbors to step up their fight against fentanyl trafficking into the U.S. Trump provided a one-month delay in February as both countries promised concessions. But Trump said Monday that there was "no room left for Mexico or for Canada" to avoid the steep new tariffs.
U.S. stock markets moved sharply lower after Trump's comments with the Dow closing down 649 points or 1.48% and the Nasdaq down 2.64%.
One of the areas where Northeast Ohioans could see an impact from tariffs with Canada, especially, is in the price of gasoline.
"Those tariffs could be especially impactful here in the Great Lakes where much of the crude oil runs through refineries in areas like Toledo, is Canadian oil," said Patrick DeHaan, head of Petroleum Analysis at GasBuddy.com "So those tariffs could have a profound negative impact on gas prices."
Starting off the week, Cleveland gas prices were down 13.1 cents per gallon since last week, averaging $2.89/g today, according to GasBuddy's survey of 831 stations in Cleveland. Prices in Cleveland are unchanged versus a month ago and stand 50.2 cents per gallon lower than a year ago. The national average price of diesel has decreased 1.9 cents in the last week and stands at $3.629 per gallon.
The stock market reaction on Monday, pointing to something that analysts like DeHaan alluded to earlier in the day, that could impact gas prices.
"The tariffs could also slow down the U.S. and Canadian economies making it more expensive to buy goods and so there could be a potential offset to the tariffs that while they may go up slightly because of the amount of the tariff they may go down because of the economic slowdown that's likely to be accompanied by any tariffs."
Many economists say the proposed tariffs, set to go into effect Tuesday on goods from Canada, Mexico and China, could increase prices for things like shoes, electronics, groceries and especially new vehicles.
"There are some big headaches coming our way," said Michael Goulder of Case Western's Weatherhead School of Management.
That's because for more than 30 years since NAFTA the parts on a new vehicle may travel across the border with Canada and Mexico several times and subject to a tariff each time.
"Our supply chains have been built as if they were one unit, and when we start putting these tariffs in place. It's going to throw them into a tizzy," he said of the supply chain managers at the big three.
"I'm sure they're doing contingency planning right now but in the near term there's not much they can do. Think about what it would take to take a stamping plant and move it across the border with hundreds of jobs," he said.
"Then you'd hate to do all of that and then the tariffs change and it's like 'oh no what did we just do?'"
"I think all of us are in a wait and see mode," said Goulder. "I mean I'm kind of curious about what's going to happen tomorrow."
