Tariffs are here. What do they mean for Long Island?

President Donald Trump’s tariffs against Canada and Mexico took effect on Tuesday, fueling fears of further inflation, including on Long Island, which already has a high cost-of-living.

Goods from Canada and Mexico will now see a 25% tax, with 10% import duties on Canadian energy products. A 10% tariff Trump placed on Chinese imports last month also doubled to 20% on Tuesday.

All countries have promised retaliatory measures of their own, with Canadian Prime Minister Justin Trudeau planning tariffs on more than $100 billion of American products by the end of March and China slapping up to 15% tariffs on a range of U.S. farm exports, as well as expanding the number of U.S. companies subject to export controls.

Mexico didn’t immediately detail retaliatory measures, but President Claudia Sheinbaum said the country would also implement tariffs on U.S. goods.

What is a tariff?

A tariff is a tax on goods and services that enter the U.S. from another country, said Stony Brook University economics professor Juan Carlos Conesa.

The purpose is to curb domestic purchases of foreign goods and, for local markets, that could translate to higher prices and lower employment, he said. 

Before the U.S. began imposing 25% tariffs on goods from Canada and Mexico as of Tuesday, most goods moved between the United States and those countries were tariff-free because of Trump’s U.S.-Mexico-Canada trade agreement.

“Right now, we are in the earlier stages of a trade war,” Conesa said. “A trade war is a very negative sum game; everybody loses.”

If the trade war continues to escalate, “then we are risking sending the entire world into an economic recession,” he said. If that happens, “we’ll suffer greatly.”

Stocks fell around the world Tuesday, eradicating gains made since Election Day fueled by hopes that Trump’s policies would strengthen the U.S. economy.

“This is a signal of how scared the world is of an escalating trade war,” Conesa said. 

What does this mean for Long Island?

These policies will raise consumer prices on Long Island — but maybe not by as much as has been feared.

“Tariffs are inflationary but not as inflationary as its critics seem to suggest,” said John A. Rizzo, an economist and Stony Brook University professor. “If there are ready substitutes for imported goods, the importer has little ability to pass on the price increase to consumers. Likewise, exporters might cut their prices if they are worried that inflationary tariffs will increase the cost of their goods, lowering sales.”

He added, “Only for goods that are really necessary and for which there are no good substitutes will the tariffs have a strong inflationary effect.”

Rizzo said how consumers respond to higher prices would impact the overall economy because 70% of economic activity on the Island and nationwide is based on consumer spending.

“If other countries respond with tariffs in kind, that would lower exports and threaten jobs and economic growth,” he said. “I think the [Trump administration] is betting that other countries will make concessions and the tariffs will be removed before too long. But that remains to be seen and certainly doesn’t seem to be happening now.”

Kyle Strober, executive director of Association for a Better Long Island, said suppliers of lumber, steel and aluminum are bracing for the impact of Tuesday’s tariffs.

“Some suppliers have already sent out notification to general contractors and developers that any quote they’d been given on steel or aluminum are no longer valid and that they’ll have to reevaluate the quote once the tariffs come into play,” he said.

Will energy cost more? 

New York Independent System Operator, which manages the state electric grid and wholesale electric marketplace, said in a Feb. 28 statement that it’s not clear “whether the NYISO will be required to play any role in collecting or remitting duties” on electrical energy from Canada. 

The operator estimated that duties on Canadian electricity could cost tens of millions of dollars per year and expressed concern that adding tariffs to electricity could impact reliability.

“The U.S. and Canada have one of the most integrated electric grids in the world, allowing system operators in both countries to pool resources for improved reliability and economic efficiency,” said Kevin Lanahan, vice president of external affairs and corporate communications, in a statement emailed to Newsday on Tuesday.

NYISO is in “close and regular contact” with Canadian operators and anticipates “having adequate supplies to meet expected demand on the system,” he said. 

National Grid said in a statement to Newsday that the company is “continuing to assess any impacts on our networks and customers.”

What do Long Islanders have to say about the measures?

Maria Gomez, a retired nurse, said she was concerned about how the tariffs would impact her grocery bill.

“I’m already paying a lot more for eggs, meat and milk,” the Island Park resident said on the Long Beach boardwalk on Tuesday. “Each week, I go to multiple stores looking for items that are on sale. I hope these tariffs don’t raise prices, which are too high as it is.”

With AP