U.S. consumers and businesses will bear the costs of the tariffs imposed this month on Canada, Mexico, and China via presidential executive orders, according to a senior trade specialist for the U.S. Chamber of Commerce.
Tariffs create “concentrated benefits and widely distributed losses,” John Murphy, senior vice president, head of international, for the U.S. Chamber of Commerce, said at the March 7 breakfast meeting of the CalChamber Council for International Trade.
Research on the impacts of the 2018–2019 tariffs offers evidence of what to expect from the tariffs proposed this month, which already are the biggest tax increase in 30 years, Murphy commented.
The studies on the 2018–2019 tariffs confirmed that 100% of the costs were passed through to American consumers and businesses. Those tariffs also sapped business confidence; executives were reluctant to invest in new plants or expansion. Hiring decisions were slowed. The manufacturing sector contracted and went into a recession in 2019. Jobs were lost in manufacturing-heavy states. Agriculture prices also were driven down to a 42-year low — the lowest since 1977.
The tariffs ordered this month are estimated to cost the typical U.S. household about $2,000, Murphy said.
Murphy went on to discuss country tariffs and product tariffs, in addition to the concern for the tariff impact on manufacturing, possible retaliation, and cost impact.
U.S.-Mexico-Canada Agreement
Murphy closed his prepared remarks with a quick overview of how the upcoming review of the U.S.-Mexico-Canada Agreement (USMCA) will work. The July 1, 2026 deadline is to review the USMCA, not renegotiate it, he explained.
Any changes to U.S. law would require action by Congress, but trade ministers can make other changes. If there is no agreement by July 2026 to continue the USMCA, it will expire by 2036, unless the required annual meetings overcome the disagreements.
Murphy said the U.S. administration is looking for stricter rules of origin to reserve the benefits of preferential trade for North America and additional rules to shut the door to Chinese goods (such as China-made car components that could enter the United States from manufacturers in Mexico, for example).
Also of concern are Canada’s digital and dairy policies, and Mexico’s energy and agriculture policies.
Staff Contact: Susanne T. Stirling
