How will Trump's tariffs impacts US businesses, consumers? Experts explain

US President Donald Trump's 25% tariff on goods from Canada and Mexico, along with the heightened 20% levy on Chinese goods is in force.

Experts state that as a result of this, consumers and businesses will be hit hard, according to a report by news agency AP.

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Businesses will have little choice, but to hike prices on a variety of products such as cars, appliances and other big-ticket items to smaller, everyday purchases including electronics, gasoline and groceries, the report read.

“International trade is critically important to our business and industry," the report quoted Best Buy CEO Corie Barry as having said on Tuesday's earnings call. “The consumer electronics supply chain is highly global, technical and complex. China and Mexico remain the No. 1 and No. 2 sources for products we sell, respectively.”

Target CEO Brian Cornell said that there will be “meaningful pressure” on the company's profits in early 2025 due to the tariffs and other costs.

Car companies would also see their supply chains disrupted since they rely on China and Mexico for parts.

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Meanwhile, some companies have been stockpiling what they can or shifting manufacturing and suppliers back to the US or other countries not impacted by the new tariffs, according to the report.

However, Barry added that when it comes to consumer electronics, “We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely.”

The US also spends billions on fruits and vegetables imported from Mexico and Canada each year, making it possible for additional sticker shock in the grocery aisle.

Apart from that, tequila, mezcal, whiskey and other spirits made in those countries can also get more expensive.

However, it isn't entirely clear as to when consumers will actually see prices rise, though perishables will likely get hit first.

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How did Canada, Mexico and China respond?

All the three countries declared on Tuesday that they would impose retaliatory taxes on many US products.

China for instance, will impose tariffs of up to 15% on multiple key US farm exports, such as American-grown chicken, pork, soy and beef, and also increased the number of US companies subject to export controls as well as other restrictions by about two dozen.

Meanwhile, Canadian Prime Minister Justin Trudeau announced that his country would slap tariffs of over $100 billion on American goods over 21 days.

Mexican President Claudia Sheinbaum announced that her country will also impose retaliatory tariffs, but said she would not announce specific tariffs until Sunday.