5 Ways Trump’s Tariffs on Mexico and Canada Will Squeeze Arizona Wallets

Economists warn that potential tariffs imposed by President Donald Trump on imports from Mexico and Canada could significantly raise prices on everyday goods and disrupt the economy in Arizona. With predictions of increased costs for essentials like gas, groceries, and housing, experts suggest the tariffs might also strain state and local budgets heavily dependent on tourism.

Daniel Scheitrum, an assistant professor at California Polytechnic State University, characterized these tariffs as a “self-imposed tax” likely to inflate living costs across the United States. Trump has proposed a 25% tariff on nearly all imports from Mexico and Canada, with a specific 10% tariff targeting Canadian oil, gas, and electricity. While the tariffs are currently on hold until March 4, the strategy appears to be aimed at negotiating border security agreements.

Both neighboring countries have indicated plans for retaliatory tariffs, raising concerns for Arizona consumers, who could face higher prices on imports while experiencing decreased demand for exports from the state. According to the Peterson Institute for International Economics, the anticipated tariffs could impose a financial burden of approximately $1,200 annually on the average American household.

Mexico is a crucial trading partner for Arizona, accounting for $8 billion in exports in 2023. Key exports from Arizona include copper, electronics, and aircraft parts, while Mexico supplies essential goods such as tomatoes, automotive components, and other produce.

The impact of increased tariffs on agriculture could be profound. The USDA reports that approximately 60% of the U.S. fresh fruit supply and 38% of fresh vegetables are imported, with Mexico supplying over half of the fruit and 69% of vegetables. Allison Moore, with the Fresh Produce Association of the Americas, stated that unless tariffs are avoided, prices for fresh produce would rise significantly, as margins are already tight for importers.

While prices for certain items may rise, markets could see the costs of tree nuts and corn products decrease, as those are typically imported by Mexico. However, the overall conclusion remains that tariffs would likely drive prices up across the board.

Imported beverages will also be impacted. Economists suggest that tariffs on beer and liquor would ultimately elevate consumer costs. Price Fishback, an economics professor at the University of Arizona, emphasized that the burden of tariffs will primarily fall on consumers, particularly for popular brands like Modelo and Corona.

Gas prices may not see immediate changes, but prolonged tariffs could eventually lead to higher fuel costs. Arizona sources most of its petroleum through pipelines from California and Texas, which may help offset some impacts initially but could lead to widespread price increases over time.

Construction trends are also in jeopardy. Maricopa County recently completed the largest volume of new homes in a decade. With fluctuations in steel prices tied to global markets and potential tariffs, builders remain uncertain about the future costs. Josh Tracy, a senior vice president at Ryan Companies, reported that market demand fluctuations make long-term predictions challenging.

Tourism, a vital sector for Arizona, produced $2.6 billion in state and local tax revenue last year, generating significant employment opportunities. A notable proportion of visitors, approximately one in ten, originate from Mexico. As retaliatory tariffs loom, Canadian Prime Minister Justin Trudeau has started promoting domestic tourism, encouraging Canadians to explore their local destinations instead of traveling to the U.S.

Concerns about the economic implications of these tariffs reverberate across Arizona. Coconino County Treasurer Sarah Benatar expressed anxiety over the potential negative impact on tourism and public services in the region. The uncertainty surrounding these tariffs is already causing chaos among local officials as they prepare for future challenges.

As the situation develops, it remains clear that increasing tariffs could lead to direct repercussions on the costs of living for Arizonans and the stability of the state’s economy.