US inflation could jump by 1.1% to 1.4% if Trump’s tariffs on Canada and Mexico take effect, and an additional 0.7% from the measures on China, forecasts global financial advisory giant, deVere Group.
The analysis comes as US President Donald Trump on Thursday said that his proposed 25% tariffs on Mexico and Canada will go into effect March 4.
He also said China will face an additional 10% tariff — on top of what the country already faces — on the same date. Reciprocal tariffs, which will apply to America’s global trade partners, will kick in April 2, Trump added.
Meanwhile, Trump threatened to impose a 25% tariff on the European Union.
deVere Group CEO Nigel Green says: «We expect that inflation in the US will be stoked by between 1.1% and 1.4% from tariffs on Canada and Mexico, with another 0.7% coming from those slapped on China.
«The economic implications are vast: the price of everyday goods will rise, corporate profits will feel the squeeze, and consumers will ultimately foot the bill.»
He continues: «These tariffs place direct pressure on supply chains deeply integrated across North America.
«Everything from cars to agricultural products will see cost surges, exacerbating inflationary pressures that had only recently shown signs of easing.
«The impact won’t stop there—businesses facing higher input costs will either absorb the hit, reducing margins, or pass it on to consumers, reinforcing an inflation cycle that the Federal Reserve has been working to contain.»
The Chinese tariffs add another layer of complexity. An additional 10% tariff on Chinese goods compounds existing duties, making it increasingly expensive for American businesses reliant on Chinese manufacturing.
«The end result? Heightened costs across industries, from technology to retail, further pushing inflation higher and forcing the Fed to reconsider its trajectory on interest rates. The central bank may need to maintain a more hawkish stance for longer than markets had anticipated, delaying the anticipated rate cuts that investors had been pricing in for 2025,» notes Nigel Green.
The US dollar’s reaction to these developments will be critical. Historically, trade tensions and inflationary fears have supported dollar strength, but the long-term trajectory depends on how aggressively the Fed reacts.
«If inflation persists at elevated levels, it could erode real purchasing power, fueling market volatility and reshaping asset allocations globally.»
The deVere CEO goes on to add: «For equity markets, sectors that thrive in an inflationary environment—such as commodities, energy, and industrials—may present upside potential.
«Companies with strong pricing power and exposure to domestic manufacturing could find themselves well-positioned amid these shifts. But on the other hand, industries reliant on imports will face headwinds, making selectivity crucial for investors navigating the changing landscape, writes de Vere.
