At midnight on Tuesday, the United States officially imposed a 25% tariff on goods imported from Canada and Mexico, launching a new phase of trade tensions with two of its closest allies. President Donald Trump also doubled existing tariffs on Chinese imports from 10% to 25%, making this the most significant tariff increase in the U.S. since the 1940s. As a result, businesses across multiple industries are scrambling to mitigate the impact of rising costs and economic uncertainty.
Immediate Effects on Businesses
From farmers to restaurant owners, the repercussions of the new tariffs are already being felt. In Minnesota, farmer Danny Lundell is concerned about the rising cost of fertilizer, particularly Canadian potash, which is essential for growing healthy crops.
“We need potash to raise healthier crops, and it doesn’t matter if you’re big, medium, or small—it’s going to affect you,” Lundell explained. His worries are echoed by many in the agricultural sector, who fear that higher input costs will make farming less profitable and drive up food prices.
In San Diego, David Spatafore, a restaurant owner, is facing increased expenses on multiple fronts. Already dealing with a surge in egg and dairy prices, he is now struggling with the rising cost of remodeling his restaurant.
“We were in the middle of a quote for a custom oven,” Spatafore said. “Then the contractor added the cost of the tariffs to his estimate. Margins in the restaurant industry are already thin—where are you supposed to absorb it?”
Manufacturers are also feeling the strain. Traci Tapani, co-president of Wyoming Machine, a sheet metal fabricator in Stacy, Minnesota, is bracing for the higher cost of aluminum. “My company will feel an immediate, detrimental impact as a result of these tariffs,” she stated. Tapani, who also serves as vice chair of the U.S. Chamber of Commerce’s Small Business Council, emphasized how uncertainty over trade policy is making it difficult for small businesses to plan for the future.
Economic Fallout and Market Reaction
Economists warn that prolonged tariffs could have severe economic consequences. If they remain in place for a year, U.S. economic growth could slow by more than one percentage point, while inflation could rise by 0.6 percentage points, according to Kathy Bostjancic, chief economist at Nationwide.
The stock market has already shown signs of distress. Many investors are wary of the long-term consequences of a full-blown trade war, which could dampen consumer spending and slow business expansion. Antonio Rivera, an international trade expert at ArentFox Schiff, noted that businesses are holding off on investment decisions due to the uncertainty surrounding future tariff policies.
“Everything else that’s coming down the pipeline is what adds to the uncertainty,” Rivera said, highlighting the administration’s threats of additional tariffs on the European Union, India, and even industries such as auto manufacturing and pharmaceuticals.
Political and Public Reactions
Political leaders and business owners alike have voiced concerns over the economic impact of the tariffs. Minnesota Governor Tim Walz criticized the administration for jeopardizing relationships with key trading partners, calling the tariffs a risky move that could have lasting repercussions.
Meanwhile, in Windsor, Ontario, Canadian citizens are reacting with disappointment. Katie Stokes, co-owner of the Whiskeyjack Boutique gift shop, shared that she has seen American customers coming in to apologize for the trade war.
“They are mortified by what’s happening and don’t support it,” Stokes said. “Some Canadians are even canceling their plans to visit the U.S. because of this.”
Potential for a Trade Compromise?
Commerce Secretary Howard Lutnick suggested on Tuesday that the U.S. might negotiate a compromise with Canada and Mexico, with an announcement possibly coming soon. However, he clarified that the tariffs would not be paused, only adjusted.
Businesses are left waiting to see if relief will come. Manuel Sotelo, who runs a trucking fleet transporting goods across the southern U.S. border, expressed frustration over the situation.
“I really thought Trump would reverse course at the last minute,” Sotelo said. “But now we’re forced to deal with the fallout.”
The long-term consequences of Trump’s tariff policies remain uncertain. While some industries may eventually adapt, the immediate impact is clear: rising costs, economic instability, and growing frustration among business owners and consumers alike.
As the situation continues to develop, companies will need to navigate these new challenges carefully. For the latest updates on the evolving trade policies and their impact on businesses, visit Issue N Fact.
