A Minnesota farmer worries about the price of fertilizer. A San Diego entrepreneur deals with an unexpected cost increase of remodeling a restaurant. A Midwestern sheet metal fabricator bemoans the prospect of higher aluminum prices.
Businesses knew that Trump鈥檚 import taxes -- tariffs -- on America鈥檚 biggest trading partners were . But many of them assumed they鈥檇 get a reprieve. After all, the unpredictable president had on Canada and Mexico for 30 days right before they were originally supposed to kick in on Feb. 4.
No such luck this time.
At midnight Tuesday, the United States imposed 25% tariffs on goods from Canada and Mexico, starting a trade war with its closest neighbors and allies. Trump also doubled his 10% levies on Chinese imports in a series of moves that took U.S. tariffs to the highest level since the 1940s. Canadian energy was shown some mercy, getting taxed at a lower 10%.
The three countries promptly announced retaliatory tariffs of their own.
Commerce Secretary Howard Lutnick said later on Tuesday that the U.S. would likely meet Canada and Mexico 鈥渋n the middle,鈥� with an announcement coming as soon as Wednesday. Lutnick told Fox Business Network the tariffs would not be paused, but that Trump would reach a compromise.
The longer the tariffs stick, the more damage they can do, forcing companies to decide between eating higher costs and passing them along to inflation-weary consumers. If the tariffs and the retaliation last a year, economist Kathy Bostjancic of Nationwide estimates, U.S. economic growth will be more than 1 percentage point lower and inflation 0.6 percentage points higher than they would have been otherwise.
Manuel Sotelo, who runs a Mexican truck fleet that carries goods across the southern U.S. border, didn鈥檛 expect that Trump would roll the dice on $2.2 trillion worth of American trade with Mexico, Canada and China.
鈥淚 really did think last afternoon or last night Trump would have reversed course,鈥欌�� Sotelo, who has a Trump bobblehead behind his desk, said Tuesday.
That's in no small part because Mexico has already taken steps to address the ostensible grievances behind Trump鈥檚 Tuesday tariffs 鈥� 鈥� including sending to the border.
But the president went ahead with the tariffs, and now businesses are scrambling to deal with them.
David Spatafore, who owns several restaurants in San Diego, said his businesses have already been pummeled by the and dairy over the last month. Tuesday鈥檚 tariffs are just the latest blow.
鈥淓verything across the board is impacted,鈥� Spatafore said.
One of his restaurants has also been in the middle of a remodel, which has grown increasingly expensive as tariffs hit Canadian lumber and steel.
鈥淲e were in the middle of a quote for a custom oven being made,鈥欌�� he said, when the contractor added the cost of the tariffs to his estimate. Thin margins in the restaurant industry mean it鈥檚 hard to eat the higher expenses.
鈥淲here are you supposed to absorb it?鈥欌�� he said.
At Mission Produce in Oxnard, California, which packs avocados and mangos and distributes them to supermarkets and restaurants around the world, co-founder and CEO Steve Barnard won鈥檛 need to raise prices right away. Mission Produce still has some inventory of Mexican avocados and other produce ripening in its U.S. warehouses.
But 鈥渋f this thing lasts 10 days or more, our costs will be substantially different,鈥欌�� he said. 鈥淲e鈥檒l have to come to the table and figure something out.鈥�
Barnard expects big retailers will resist price increases, while smaller, independent chains might have to raise prices sooner because they have less pre-tariff inventory on hand.
鈥淢y company will feel an immediate, detrimental impact as a result of these tariffs,鈥� Traci Tapani, co-president with her sister of Wyoming Machine, a sheet metal fabricator in Stacy, Minnesota that relies on Canadian aluminum, said in a statement. Tapani is the vice chair of the U.S. Chamber of Commerce鈥檚 Small Business Council. 鈥淭he threats and uncertainty have made it hard to make business decisions, and these kinds of tariffs will make it extremely difficult for small businesses like mine to grow.鈥�
In Cannon Falls, Minnesota, about 45 miles (72 kilometers) south of Minneapolis, farmer Danny Lundell is particularly worried that Trump鈥檚 import taxes will drive up the price of Canadian potash fertilizer.
鈥淲e need potash to raise healthier crops,鈥欌�� he said. 鈥淎nd it doesn鈥檛 matter if you鈥檙e big, medium or small, it鈥檚 going to affect you.鈥欌��
Minnesota鈥檚 Democratic governor, Tim Walz, visited Lundell鈥檚 farm Tuesday to criticize Trump for jeopardizing relationships with his state鈥檚 biggest trading partners.
Higher costs aren鈥檛 the only consequence of Trump鈥檚 trade wars. There鈥檚 also the uncertainty as the president threatens, delays and actually imposes import taxes.
鈥淭hings are unfolding so quickly,鈥� , told reporters Tuesday. 鈥淲e will watch this carefully and understand: Are these long-term tariffs? Is this a short-term action? How will this unfold over time? I think all of us are speculating.鈥欌��
Uncertainty can take an economic toll as businesses delay plans to make investments and sign up new suppliers until they know which countries and which products are likely to be tariff targets.
During Trump鈥檚 first-term trade battles, U.S. business investment weakened late in 2019, prompting the Federal Reserve to cut its benchmark interest rate three times in second half of the year to provide some offsetting economic stimulus.
Adding to the uncertainty now are Trump鈥檚 plans for more tariffs, not least his call for to raise U.S. duties to match higher tariffs charged by other countries. Trump could also impose more tariffs on the European Union, India, computer chips, autos and pharmaceutical drugs.
鈥淓verything else that鈥檚 coming down the pipeline is what adds to the uncertainty,鈥欌�� said Antonio Rivera, a partner in the international trade practice at the law firm ArentFox Schiff.
The Whiskeyjack Boutique gift shop in Windsor, Ontario, has been getting some usual customers: Americans stopping in to apologize for Trump鈥檚 decision to start a trade war with Canada.
鈥淭hey are mortified by what鈥檚 happening, and they don鈥檛 support what鈥檚 going on, and they don鈥檛 like how Canada鈥檚 being kind of dragged through the mud on this,鈥� said Katie Stokes, co-owner of the shop.
Stokes has also heard Canadians planning to cancel plans to take vacations in the United States.
鈥淚t鈥檚 almost remorseful and sad, like people are upset, and they don鈥檛 love how this is playing out,鈥欌�� she said.
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This story was first published on Mar. 5, 2025. It was updated on Mar. 6, 2025 to correct the name of Fox Business Network.
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Associated Press Staff Writers Jaimie Ding in Los Angeles; Anne D鈥橧nnocenzio in New York;, Dee-Ann Durbin in Detroit; Mike Householder in Windsor, Ontario, Canada; Megan Janetsky in Mexico City; and Steve Karnowski in Minneapolis contributed to this report.
Paul Wiseman, The Associated Press
