Borderlands Mexico: Trump tariffs could raise consumer prices in short term, expert says

Yahoo

27-01-2025

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Trump tariffs could raise consumer prices in short term, expert says; TransPak expands logistics operation in Texas; Logisticus Group opens supply chain facility near Phoenix; and Grupo Lintel plans $83 million logistics park in central Mexico.
President Donald Trump's threat to put 25% tariffs on imports from Mexico and Canada could impact everyone from manufacturing companies, transporters, logistics companies to consumers, according to Matt Lekstutis, director at Efficio.
'There will definitely be an increase in pricing for imported goods, which will push companies to look for alternative suppliers or manufacturing sites,' Lekstutis told FreightWaves in an email.
Chicago-based Efficio is a global procurement and supply chain consultancy. The company has offices in Canada and Mexico.
Trump said he would impose 25% tariffs on goods imported from Mexico and Canada, along with an additional 10% tax on imported goods from China, starting Feb. 1.
On Thursday, Trump told global business leaders gathered at the World Economic Forum in Davos, Switzerland, to manufacture their products in the U.S. or face tariffs.
'Come make your product in America, and we will give you among the lowest taxes of any nation on Earth,' Trump said, speaking live from the White House. 'But if you don't make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff.'
However, tariffs are taxes that are paid by businesses — not other countries — when foreign-made goods arrive at the U.S. border.
According to the nonprofit National Bureau of Economic Research (NBER), tariffs raise prices on foreign made goods, which increases the costs of goods for consumers.
'Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers,' NBER said in a 2019 study titled 'The Impact of the 2018 Trade War on U.S. Prices and Welfare.' 'We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries.'
Lekstutis said Trump's tariff policies could bring manufacturing jobs back to the United States, but not immediately.
'I do believe the tariffs will bring back manufacturing jobs to the states. However, there are a few complexities to consider — the increase in taxes will push companies to reevaluate their need to automate their processes and manufacturing roles,' Lekstutis. 'Changing the supply chain network requires time and investments into resources. If this change is being driven by the four year term by President Trump, the companies may not be willing to make that investment.'
Lekstutis said in the short term tariffs could impact the price of raw materials such steel, aluminum and rare earth minerals, which could disrupt a company's competitiveness.
'Based on the industry, there could be a large detrimental impact on a company's operations,' Lekstutis said. 'If there is an increase in raw materials or a delay in those shipments, there is the possibility of a ripple down effect into the rest of the supply chain operations.
Some tips to mitigate the impact of tariffs include implementing long term contracts, diversifying suppliers, and increasing automation in manufacturing sites, packaging centers, and distribution centers.
'The sourcing process can vary in complexity based on how resilient a brand is to change,' Lekstutis said. 'It can be anywhere from a few months to a few years to find alternative manufacturers and get them implemented. Due to the complexity of that, brands may choose to remain with their current manufacturers in order to maintain their reputation with their customers and not disrupt the supply chain.'
If Trump does impose tariffs on countries across the globe, other countries could place retaliatory tariffs on American goods, Lekstutis said.
'Similar to Canada, I foresee other countries taking a protectionist stance against the states threatening potential retaliation,' he said.
TransPak, a third party logistics firm specializing in packaging and crating services, has opened two new buildings totaling 300,000-square-foot in Manor, Texas, just outside of Austin.
The new facilities expands Transpak's existing footprint in Manor, where the company provides logistics solutions for the semiconductor industry in central Texas, according to a news release.
The expansion will create up to 100 new jobs. TransPak already employs over 200 workers in Manor.
San Jose, California-based TransPak was founded in 1952. The company operates in over 65 global locations in 12 countries, employing 3,200 people.
Greenville, South Carolina-based Logisticus Group has leased a 483,300-square-foot facility at the Park303 industrial development in Glendale, Arizona.
Logisticus Group will provide third party logistics services to an alternative energy company in the area, according to a news release. Glendale is located about 10 miles north of Phoenix.
Logisticus Group, founded in 2012, is a 3PL and heavy cargo project consulting firm. The company provides services throughout North and South America.
Mexico-based Grupo Lintel is investing $83 million to build the San Marcos Valley Industrial Park in Aguascalientes, Mexico.
The 356-acre San Marcos Valley Industrial Park is scheduled to open in 2026. Aguascalientes is located about 300 miles north of Mexico City and 488 miles south of Laredo, Texas.
The industrial park is aimed at domestic and foreign companies in the automotive, electronic components, technology, logistics and storage sectors, according to a news release.
Aguascalientes is a major automotive manufacturing hub, according to international trade consultant Tetakawi. About 70% of its auto production is for export,
Grupo Lintel was founded in 1983 and is based in Juarez, Mexico. The company is a real estate firm specializing in industrial facilities.
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