Trump may impose tariffs on Canada, Mexico before February 1

Vehicles and parts imported from Canada and Mexico could become more expensive

President Trump is back in the White House, which means tariffs are all but certain, although he seems to have no idea how they work. It was shocking, but that didn’t stop the Commander-in-Chief from mentioning them in his inaugural address.

Trump spoke yesterday and said: “I will immediately begin reforming our trading system to protect American workers and families. Instead of taxing our citizens to enrich other countries, we will impose tariffs and levies on foreign countries.” To enrich our citizens.”

More: Tariffs could add $3,000 to cheap cars, hitting budget buyers

Of course, that’s not how tariffs work. As PBS pointed out last year, tariffs are paid by the importer, in this case an American company. These companies may pass on higher costs to consumers. So while the extra money will go to the government, it’ll likely come out of your wallet in some way.

However, Trump mentioned a new “IRS” that would “collect all duties, duties and revenues.” He went on to claim that “a lot of money from foreign sources is going to pour into our treasury.”

Later in the day, Trump laid out his “America First” trade policy. It calls on the Commerce Secretary, the Treasury Secretary and the U.S. Trade Representative to “investigate the causes of our country’s large and persistent annual trade deficits … and the economic and national security implications and risks of such deficits.” It also calls for proposals such as “global supplemental tariffs.” or other policies to offset such deficits” and other recommendations.

Trump also wants to study the feasibility of establishing an Internal Revenue Service and review existing trade agreements. He went on to call for a review of export controls related to strategic adversaries and geopolitical rivals and all kinds of smaller things.

While much of this was laying the groundwork for future plans, Trump ultimately proposed imposing 25% tariffs on goods from Mexico and Canada.

according to BloombergAsked by reporters on Monday night, Trump said, “We’re looking at 25% for Mexico and Canada because they’re allowing a lot of people in. I think we’ll do it on February 1st.”

Wolfe Research has previously said this could add about $3,000 to the cost of a new car.

While this is just one way consumers could be harmed, CBC News reports that our northern neighbor is ready to retaliate with “immediate tariffs” on $25.8 billion (C$37 billion) worth of U.S. goods. If Trump refuses to concede, that number could rise to $76.7 billion (C$110 billion) worth of goods.

Needless to say, alarm bells are being sounded around the world as businesses worry about the impact of tariffs. Consumers are also suffering from the pain of inflation, and tariffs will only make things worse.

Of course, what Trump said and what he did are two different things. As a result, only time will tell what will happen.