After months of insisting that Mexico will pay for a proposed border wall, President Donald Trump has apparently decided that American consumers might be the ones to foot the bill instead.
This week, aides to President Donald Trump floated the idea of a 20% tax on Mexican goods to fund the construction of Trump’s proposed border wall, although it’s difficult to tell exactly what mechanism Trump really wants to see. But if a tariff is in fact imposed, its impact will fall directly on American shoppers for a wide range of products including beer and tequila, avocados and other produce.
Mexico is the third largest supplier of goods to the United States and our second largest source of agricultural imports, according to the Office of the U.S. Trade Representative. In 2015, Mexican imports to America totaled $295 billion, including $4.8 billion in fresh vegetables and $4.3 billion in fruit. We also imported $2.7 billion in beer and $1.7 billion in snack foods. Mexico supplies 75% of the avocados Americans eat, and a growing share of hothouse tomatoes, as well as bell peppers, grapes, cucumbers, onions and melons, mangoes, limes, squash and other produce.
Assuming that such a tariff would be entirely passed on to consumers (versus retailers absorbing the hit), this is what a 20% surcharge could look like for a hypothetical basket of groceries comprised of some of the most common items imported from Mexico (current prices taken from Peapod and Total Wine):
The brunt of any tariffs would also fall disproportionately on lower-income households, who spend a larger share of their income on food. According to the government’s Consumer Expenditure Survey, households earning less than $40,000 a year spent between 14.4% and 16.0% of their income on food in 2015, compared to 9.6% for households earning $200,000 or more.
Trump could theoretically impose his threatened tariffs unilaterally, according to an analysis of presidential authority under existing law by Gary Hufbauer of the Petersen Institute for International Economics. The powers granted to the President by the U.S. Constitution and under statute give Trump the authority to act on his own under certain circumstances. However, Hufbauer writes, such an action would also no doubt trigger retaliatory tariffs by Mexico – which would in turn hurt U.S. exporters and their employees – as well as legal challenges from U.S. companies and states hurt by the tariffs.
A post-election Quinnipiac University poll found that despite Trump’s victory, 55% of Americans oppose a border wall. It’s hard to imagine support for Trump’s proposal will grow if the price is yet another blow to Americans’ already-strapped pocketbooks.
