Expect to pay more for guacamole, snack foods, beer and tequila this summer.
President Donald Trump announced on Twitter on Thursday, May 30, that he will impose a 5% tariff on imported goods from Mexico starting June 10, and will "gradually increase" it by 5% each month up to October until "such time as illegal migrants coming through Mexico" stop.
Experts, including White House economic adviser Larry Kudlow, say American consumers can expect to pay the price as U.S. businesses pass on increased costs. The U.S. imported $346.5 billion worth of goods from Mexico in 2018, according to government data, meaning a 5% tariff will cost over $17 billion.
Earlier this month, the Trump administration increased tariffs on $200 billion worth of Chinese products from 10% to 25%, which is expected to cost the average U.S. household $831 a year, according to a recent paper from the New York Federal Reserve.
Top imports from Mexico, according to the government, include vehicles (including passenger cars), machinery (including flat-screen TVs), mineral fuels and medical instruments. Mexico is also the U.S.'s largest agricultural importer, which means the following foods will likely become more expensive:
Business Insider reports that the tariffs could have significant impact on the avocado trade, with the U.S. importing 85% of its Hass avocados from Mexico last year. Chipotle stock dropped 3% on Friday, as investors worried about how the restaurant chain would be impacted by the increased avocado costs.
Mark Hamrick, senior economic analyst at Bankrate.com, says imposing tariffs to fix an immigration problem is akin to "fielding a baseball team for a football game. It doesn't compute and is likely counter-productive."
"While the federal income tax cut gave consumers and corporations additional ability to spend, billions of dollars in tariffs on Mexican imports does just the opposite and worse," Hamrick added in a statement to CNBC Make It.
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