President Donald Trump has currently imposed a 20% tariff on all Chinese imports and a 25% tariff on all Mexican imports and on all non-energy Canadian imports, according to the Tax Foundation. In the first week of April, the Dow Jones Industrial Average, a stock index of 30 prominent companies dropped by over 2,000 points the first week of April

Tariffs are a tax imposed on goods imported from a foreign country. For example, with the current tariffs, if a hypothetical American grocery store buys $5000 worth of produce from a Mexican producer, the American grocery store would pay a 25% tax on that produce. 25% of $5000 is $1250. That $1250 would be paid to the United States (US) government. 

When tariffs are imposed, typically the cost of them is passed along to the consumers. An American individual may not be buying produce directly from a Mexican company, but they are likely buying produce grown in Mexico. According to the Center for North American Studies, 41.2% of US produce is imported, Mexico accounting for 63% of vegetable imports into the United States and 47% of our fruit and nut imports, according to the United States Department of Agriculture (USDA). Some fruits and vegetables, such as bananas, pineapples, limes, and avocados, are almost entirely imported from either Mexico or growers in other Central and South American countries.

Tariffs are usually put in place for one of two reasons: to encourage consumers to purchase domestically made goods, or as a response to a tariff imposed on the country, according to the Council on Foreign Relations. Trump’s tariffs, according to the White House, are made to retaliate against the illegal importation of illicit substances like fentanyl into the US. The tariffs Canada has put on the US are in response to the tariffs the US put on Canada. 

These tariffs will also affect Americans disproportionately. The poorest 20% of Americans will lose an estimated 5.5% of their disposable income, while the highest income households will lose around 1.2%, according to Axios. 

If the point of new tariffs is to put pressure on foreign governments to further crack down on illicit drug production and smuggling into the United States, then it’s clearly not working. Canada has responded to Trump’s tariffs with a 25% tariff on certain American imports into Canada, according to Canada’s official website. China has responded with tariffs on American agricultural products, according to the Associated Press, and Mexican government leadership has proposed tariffs against the US in response to American tariffs, according to PBS News. 

Tariffs against these countries are obviously not pressuring these countries to crack down on illicit substances being smuggled across borders, but what these tariffs are doing is increasing inflation for the American consumer in a market that was already having issues with high inflation. They will only hurt American consumers and previously established trade relationships with American trading partners.