Higher prices on cars, food, electronics: How Trump's tariffs could impact Indiana

Yahoo

05-02-2025

Following through on a key campaign promise, President Donald Trump began enacting tariffs on a number of foreign goods over the weekend and threatened that more could be on the way in the future.
Though the full details, timeline and impacted countries remain in flux, many Hoosiers are bracing for the extra costs that tariffs could bring to industries across the state.
Trump's proposed tariffs could heavily impact Indiana's robust automotive industry, as well as food, oil and construction industries, economic experts say.
Canada, Mexico and China — the three nations on whose goods Trump threatened to enact tariffs — ranked as the top trade partners for Indiana in 2023, leading many economic and industry experts grappling with the potential impact on consumers and the economy.This past weekend Trump announced plans to put tariffs on most goods from Canada, Mexico, and China. Earlier this week tariffs for the first two countries were placed on a 30-day pause after their leaders promised to take steps to curb the flow of fentanyl and undocumented immigrants into the United States.
However, on Tuesday at midnight, a 10% tariff on all Chinese goods went into effect, placing extra costs on thousands of goods from toys to electronics and renewing a trade war between the world's two largest economies.
Indiana Chamber of Commerce President and CEO Vanessa Green Sinders said the chamber was encouraged by the negotiations between Trump and the country's neighbors but remained cognizant of the strain tariffs could place on Indiana industries.
"We urge the President to keep negotiating to reach agreements that are beneficial to Indiana and our nation. We have asked our member companies for feedback on specific areas of concerns and will use that as the basis for any future action we would share with the Trump administration and Indiana's congressional delegation," Sinders told the IndyStar in an emailed statement.
Tariffs act as an extra tax on products brought into the United States. The importer typically pays the tax, meaning American businesses could pass down the extra cost to consumers to recoup profit margins, said Andreas Hauskrecht, professor of business economics at the Indiana University Kelley School of Business.
If the tariffs on all three countries Trump has already named go into effect, Hauskrecht estimates, American households would spend $180 to $240 more per month. He likened the tariffs to an added sales tax.
For instance, the tariffs on Chinese goods could mean higher purchase prices on goods from clothing to Apple products.
Indiana consumers could feel the impact sooner rather than later since businesses might decide to preemptively raise prices on foreign products already in the United States, said Purdue University international economics professor David Hummels.
As the uncertainty wears on, business leaders face an unsteady economic future, meaning Indiana could see less hiring and less investment in the local economy, Hummels said.
"Do I hire more workers? Do I expand my plant operations? Do I put in another order for parts and components? Or do we just kind of wait on all that stuff until I have a lot more certainty on my environment? I think they're in a very difficult position right now," Hummels said.
The Indiana Manufacturers Association, representing some 1,100 companies across Indiana, sounded the alarm on the proposed tariffs on Mexican and Canadian goods on Monday.
'However the next few weeks or months develop, Indiana's manufacturing industry and consequently the state's economy will be impacted,' President and CEO of the Indiana Manufacturers Association Andrew Berger said in a statement issued before Trump paused the plan to place tariffs on goods from Canada and Mexico.
If Trump follows through with plans to place tariffs on Canadian goods, the automotive industry would also likely take a big hit since even cars manufactured in the United States use parts that are manufactured abroad.
Indiana ranks second in the automotive industry among the states, producing more than 1.3 million trucks and cars each year, according to the Northeast Indiana Regional Authority. General Motors maintains a large presence in Northeast Indiana, having invested more than $23 billion in facilities here over the past decade.
Tariffs could essentially halt the state's car production in its tracks, Hummels said.
But more than commercial vehicles could be affected by tariffs.
A spokesperson for Columbus-headquartered Cummins Inc. said the engine manufacturing company was "monitoring actions closely." In a statement, Cummins's spokeswoman Melinda Koski said that the company "supports targeted trade actions and modern trade agreements that address systemic issues, promote U.S. manufacturing, and ensure American businesses remain competitive globally."
Nor would the impact be restricted to vehicles. The Midwest also relies heavily on Canadian crude oil to fill gas station pumps, said Patrick De Haan, head of petroleum analysis at GasBuddy, an oil price tracking website.
Should Canadian energy products face tariffs in the future, De Haan predicted a slow but modest growth in oil prices.
Averting tariffs for now also led leaders in the construction industry to breathe a sigh of relief. About 7% of American construction materials originate in another country, said Rick Wajda, CEO of the Indiana Builders Association.
New home constructions often rely on goods such as softwood timber from Canada and gypsum, a key product for cement and drywall, from Mexico. If the Trump administration does decide to institute tariffs, Wajda said he hoped some exceptions could be made to prevent impacts on home buyers.
"We certainly understand the bigger picture and the intentional policy goals on trade policy, but we continue to remind them of the effects on the housing industry and hope that they would consider exempting construction materials from potential tariffs to help ease that stress on the housing industry moving forward," Wajda said.
But individual consumers won't be the only Americans burdened by the tariffs, Hauskrecht said. The longtime trade economist said China, Canada and Mexico would likely respond to the United States with retaliatory tariffs of their own, directly harming American industries.
China retaliated with its own set of levies Tuesday —15% for U.S. coal and 10% for crude oil, farm equipment and cars — alongside a trade curb banning a handful of metals from sale to the United States. The five metals are used in various American defense and energy products.
'It's not only that we hit our consumers between the eyes,' Hauskrecht said. 'Also, our producers will have a reduction in demand and will sell less. It's a lose-lose strategy for everyone involved.'
While the automotive and consumer goods industries would likely be hardest hit, tariffs on food could increase restaurants' inventory costs. Last year from January through November, the United States imported $6.4 billion in meat and livestock products from Canada and $10.8 billion in fruit products from Mexico, according to data from the United States Department of Agriculture.
Carlos Villagrán, who owns Chao Vietnamese Street Food in Fishers, said his biggest worry isn't meat since he primarily sources from within Indiana. He worries more about tariffs on Chinese and Mexican products like napkins, gloves and the Styrofoam boxes crucial to Chao's take-out operation.
Villagrán maintains a spreadsheet to track expenses and estimates that since the COVID-19 pandemic, roughly 30-50% of his restaurant's sales on a given day are to-go orders. He said items like boxes, soup containers, sauce cups and chopsticks cost him a few hundred dollars each week. If the cost of these products — as well as ingredients from Mexico like avocados, peppers, mangoes and spices — reach a certain threshold outlined in his spreadsheet, Villagrán said he will have to compensate by increasing the price of certain menu items.
'The only person that's (ultimately) going to have to pay for (the cost of tariffs) is me,' Villagrán said. 'And I can't pay it myself, so I'm going to have to bring it onto the customers.'
Even some experts didn't want to place bets on what happens to Canadian and Mexican goods once the 30-day pause ends or whether Trump will impose other tariffs. Hauskrecht said that from a financial standpoint, the tariffs if imposed would likely wind up costing Americans more.
'It is a very aggressive, transactional negotiation technique,' Hauskrecht said. 'But economically, it makes zero sense. It's just a negotiation technique to convince our partners to follow our advice, to say it friendly.'
Alysa Guffey covers growth and development for IndyStar. Contact her at [e-mail].
Contact dining reporter Bradley Hohulin at [e-mail]. You can follow him on Twitter/X @BradleyHohulin.
This article originally appeared on Indianapolis Star: Higher prices on cars, food, electronics: How tariffs could impact Indiana