SACRAMENTO — California is one of biggest trading partners with Mexico, importing about $44 billion in goods. And of course, the cost of those goods will be directly impacted by president’s trump’s tariffs.
You would think most of the goods coming in from Mexico to California are fruits and vegetables, especially those not available here in the winter but that pales in comparison to electronic and automobile parts and equipment.
Seventeen percent of Mexico’s exports come to California; of the $44 billion in goods, fully $30 billion is in the form of electronics, machinery and parts.
Tariffs that could jump to 25% of goods means cost increases for big screen TV’s and other consumer electronics.
Economist, George Jouganatos, says “the consensus is that tariffs are no good, they lead to trade wars.
California manufacturers who make products with machinery produced in Mexico are likely to increase prices.
While car makers in Michigan will be hit hard by car parts made in Mexico that will cost more; Mexico also imports finished cars to California.
The state sells around two million cars a year with car dealers employing hundreds of thousands of workers.
Chevrolets, Fords, Hondas, Toyotas, Hyundais and Nissans are among some of the makers that have plants in Mexico.
Some economists say the price of cars and pick-up trucks could go up by $1,300 on average. One consequence: if you pay more for a new car, you have less money to spend at local businesses.
“We may not go to the Kings games as often, or eat downtown as expensive as those items are already so this could lead to unemployment,” Jouganatos said.
The tariff already has shoppers spooked.
“All scopes of businesses are going to be affected by it and the consumer is going to take the brunt of it,” said Robert Gould.
Mexico also imports dozens of farm products, from tomatoes, apples, avocados and strawberries to a laundry list of row crops.
While California grown produce dominates grocery shelves now, they will be more expensive because in some cases it can’t make up for what comes in from Mexico. And expect prices to go up even higher come fall and winter when California farms go dormant.
Some are already wincing at high food prices.
“It’s getting to be unfair, it’s just not right,” said Laura Patterson.
Let’s not forget that California export $30 billion in goods to Mexico. A tit for tat tariff war means California businesses could suffer if consumers in Mexico stop buying California products.
“They may retaliate on us, so this instability is something we just don’t need,” Jouganatos said.
That instability is already having an effect on the stock market, the business sector and consumer confidence, even though the tariffs are not yet in place.