An economics expert from Auburn University at Montgomery (AUM) warns that Alabamians may soon face higher prices at the grocery store and gas pump. This comes as the White House moves to impose tariffs on U.S. imports from Canada, Mexico, China and, more recently, stricter tariffs on steel and aluminum, he tells AUM News.
On Monday, the White House announced 25 percent tariffs on steel and aluminum entering the U.S. across the board. The decision follows the administration’s earlier tariffs on goods imported from Canada, Mexico and China, which has faced strong backlash from the U.S.’s three main trade partners, leading to a 30-day suspension of tariffs on Mexico and Canada to allow for negotiations.
Despite this pause, the potential trickle-down effect — particularly for states like Alabama that heavily rely on industries dependent on imported goods, such as steel and aluminum — will likely be felt in everyday expenses such as food and gas, said Agnitra Roy Choudhury, associate professor of economics in AUM’s College of Liberal Arts and Social Sciences.
“The degree of price increases will vary by state, but Alabamians can expect to see higher costs for groceries and gas if [President] Trump’s tariffs remain in place,” he said. “Gas is a perfectly competitive market, so disruptions in one area of the market will affect the whole system.”
Industries in Alabama, including automobile manufacturers, may be especially vulnerable to the proposed tariff system because they rely on steel and aluminum imports from Canada. This could lead to more expensive imported car parts and machinery, raising production costs, Roy Choudhury said.
“This will drive up the cost of products,” he said. “The same can be said about Alabama’s aerospace industry, which is heavily reliant on steel and aluminum imports as well. On the other hand, domestic steel producers could see higher profits, potentially offsetting some negative effects – though much depends on how strategically we handle these industries.”
Alabama’s agricultural sector, which is ranked 31st in agricultural exporting for poultry, fish, oilseeds and livestock, will also likely face price increases that will be passed down to consumers.
“Alabama imports vegetables such as tomatoes from Mexico, and the tariffs will drive up prices,” Roy Choudhury said. “Additionally, we may see shortages or seasonal fluctuations in the availability of certain agricultural products. If the trade war ensues between China, Canada and Mexico [and the U.S.], Alabama could face higher tariffs on soybean exports, making our agricultural products less competitive globally. We might also see higher domestic prices for some U.S.-produced agricultural goods due to the tariffs.”
Despite these concerns among economists, there are potential positive outcomes from the type of tariff system being imposed, Roy Choudhury said.
“Tariffs can be used as a negotiation tool to secure fair trade deals with other countries,” he said. “If this succeeds, this could help address the immigration crisis at the U.S. southern border. The administration might also be able to push China to appreciate its currency, which would make goods across the globe more competitive.”
However, Roy Choudhury cautioned that Alabamians should prepare for prolonged uncertainty in key sectors like the state’s auto, agriculture, and fuel markets.
“The best-case scenario is that countries relent to the Trump administration’s demand, but in the long run nations could become hesitant to do business with the U.S. for fear of future retaliations or aggressive political tactics,” he said. “While tariffs could help improve negotiations for fair trade agreements that benefit U.S. industries and the economy, a long, drawn-out trade war will be expensive, burdening U.S. consumers and businesses. The uncertainty surrounding the tariffs makes long-term planning for businesses difficult.”
The flip side is that Americans could see a tit-for-tat trade war between China and the U.S., Roy Choudhury warned.
“This would create disruptions in the global supply chain everywhere,” he said.