President Donald Trump is set to put tariffs on goods imported from Canada, Mexico, and China, with the aim of bolstering U.S. manufacturing. The tariffs, proposed to be as high as 25%, are scheduled to come to fruition on February 1, 2025, as the administration strives to reverse decades of free trade agreements. This policy shift raises immediate concerns across various industries—particularly the food and pharmaceutical sectors—about price increases and supply chain complications.
Local economists predict grocery prices will be among the first to reflect these tariff changes, impacting American households right at the checkout line. Timothy Richards, the Morrison chair of agribusiness at Arizona State University, cautioned, "Food, in general, will become more expensive." Given Mexico's significant role as the primary supplier of produce to the U.S., the potential for price spikes on widely consumed items, such as avocados and tomatoes, looms large. For Arizona alone, over $200 million worth of vegetables, fruits, and nuts were imported from Mexico last year.
The ripple effect of Trump’s tariff proposals is also felt heavily within the pharmaceutical industry. According to Arthur Wong, managing director at S&P Global Ratings, tariffs on imports from key suppliers like China could drive up costs for generic drugs, which account for approximately 90% of all prescriptions filled in the United States. Wong explained, "Generics account for roughly 90 percent of all U.S. prescriptions, and tariffs would potentially raise costs for a significant portion of the market from a prescription basis." If implemented, this could lead to higher prices and potential shortages, particularly for generic drugs heavily reliant on foreign-made active pharmaceutical ingredients (APIs).
Mark Hendrickson, director of supply chain policy at Premier Inc., noted the extensive reliance on overseas production for medical components, saying, "80 percent of the API is produced overseas. There will be an impact, especially for those products." Medical devices and their components echo similar concerns, as these import tariffs would undoubtedly lead to inflated prices for essentials like masks, gowns, and other personal protective equipment. Dan Izhaky, president of the American Medical Manufacturers Association, stated, "The cost of medical equipment will absolutely go up if tariffs are implemented." The disarray would not only strain consumers but also amplify existing vulnerabilities within the medical supply chain.
A broader discussion around the economic ramifications of such tariffs brings local economist Ray Perryman's insights to the forefront. Perryman clarified, "A lot of people are saying the foreign government pays the tariff…that’s not true. It is people and companies in the United States who pay the tariff." He warned of catastrophic costs, forecasting potential impacts of $250 billion annually to the U.S. economy and the loss of two million jobs if the tariffs come to fruition.
With uncertainties surrounding the specifics of Trump’s tariff agreements yet to be ironed out, economists remain mixed on the outcome. Joanne Cummings, Political Science Professor at Baylor, pointed to the tariffs’ objective: "Trump has said, you know I’m gonna put tariffs on people, and then the economy will be improved." Yet many experts are skeptical about this “improvement,” especially as supply chain experts fear tariffs could disrupt medical supply lines, driving up costs rather than creating jobs.
On the other side of the coin, the administration maintains these tariffs would protect American workers and promote domestic manufacturing. Brian Hughes, spokesperson for the Trump-Vance transition team, emphasized, "President Trump has promised tariff policies which protect the American manufacturers and working men and women from unfair practices of foreign companies." This perspective espouses hope for revitalizing American production, yet experts caution about whether companies would even take the plunge to shift production back to the U.S.
While the absolute impact of these proposed tariffs remains uncertain as they are still on the drawing board, it is evident they stand to disrupt various sectors significantly. From the kitchen to the pharmacy, all eyes are on how these policies might reshape the American consumer experience and the broader economic framework. With local and national stakeholders holding their breath, February 1 is fast approaching, bringing with it the potential for substantial shifts across the board. The final chapter remains unwritten, as both businesses and consumers grapple with the impending changes.