Widespread dissatisfaction with rising prices may have contributed to Donald Trump’s election victory, yet as the president-elect prepares to take office in January, he may inadvertently trigger further inflation.

On Monday, Trump revealed plans to implement extensive tariffs on goods from Canada, Mexico, and China to tackle issues related to illegal immigration and drug trafficking. He announced that all imports from Canada and Mexico would incur a 25% tariff, and additional 10% tariffs would apply to products from China, as he noted on Truth Social.

“Many people are unaware that tariffs actually raise prices,” explained Dana Peterson, chief economist at The Conference Board. “It’s common for voters to base their decisions on issues that may not truly benefit their economic wellbeing.”

According to Ernie Tedeschi, director of economics at the Yale Budget Lab, the tariffs implemented on Monday could diminish the average American household’s purchasing power by $1,200 in 2023 dollars.

While consumers might adapt by shifting their purchases from imported goods to domestic alternatives, Tedeschi noted that such adjustments aren’t feasible for all product categories.

A case in point is agriculture, with the United States being Mexico’s primary agricultural trading partner, importing about 92% of its agricultural exports. Tedeschi pointed out that while consumers can delay non-essential purchases like electronics or clothing, it’s much more difficult to replace tariffs affecting fresh food in the short term as retailers seek alternative sources.

Additionally, it’s important to note that a significant portion of imports includes raw materials—such as lumber and oil from Canada—which may contribute to inflation in the short term, as Tedeschi explained.

Importers are likely to pass on the costs of these tariffs to consumers, which could prompt domestic competitors to follow suit, warned Jennifer Lee, senior economist and managing director at BMO Capital Markets. This would further limit choices available to consumers.

Moreover, if consumers begin to stock up now to avoid higher prices in the future, this may further drive inflation as demand surges, Lee added. “We might experience an increase in purchases ahead of expected price hikes, similar to what happened before the port strike,” she noted.

While it’s feasible for consumers to accumulate items like toothpaste, businesses usually don’t have that same flexibility, Peterson stated. “Businesses must plan their inventories months ahead of time.”

What impact will inflation have on interest rates?

Peterson suggested that the tariff threats might simply be a negotiation strategy. Importantly, many companies can apply for exemptions to the tariffs if their operations are essential for national security.

However, for voters who expressed their dissatisfaction with rising prices at the polls, the timing of these tariff revelations is noteworthy, Lee remarked. “This comes at a moment when inflation is appearing to be more persistent,” she said. “Fed Chair Powell has sounded less accommodating recently. If inflation rises, the Federal Reserve may become more hesitant to loosen policies as quickly as before.”