Trump’s Mexico and Canada tariffs would kill 2 million U.S. jobs, Texas economist warns

If President-elect Donald Trump goes through with his threat to levy steep tariffs on both Canada and Mexico, the U.S. would lose 2 million jobs and see its annual gross domestic product plummet by $250.6 billion, a top Texas economist warns.

Trump has said he plans to impose 25% tariffs on all goods from Canada and Mexico in a bid to force leaders of the two major U.S. trading partners to crack down on immigration and the flow of fentanyl.

In a new research report, Waco-based economist M. Ray Perryman cautioned that such a scenario would blow back on the U.S. to the effect of losses of 0.91% of gross domestic product, 0.95% of earned income and a 1.27% jump in unemployment.

U.S. consumers — who cited high prices as a key reason they voted for Trump — would directly feel the effect of skyrocketing prices, according to the report. Perryman estimates tariffs would bump inflation up by 1.04% with food, electronics and autos experiencing the biggest price hikes.

The report also notes that the economic impacts would be even worse in the likelihood that Canada and Mexico retaliate since U.S. manufacturers rely heavily on components shipped from those two counties.

“Clearly, imposing substantial tariffs on major trading partners is bad for all nations involved,” Perryman wrote. “It is crucial that agreements on key issues are reached among the North American nations without the implementation of such destructive measures.”

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This article appears in Nov 27 – Dec 10, 2024.