Trump's promised tariffs are here. What does this 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.

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 United States 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 United States 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 from his first term.

How could tariffs impact the economy?

"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."

Escalating the trade war risks a recession, he said. If that happens, "we'll suffer greatly."

Stocks fell around the world Tuesday, signaling "how scared the world is of an escalating trade war," Conesa said.

What does this mean for Long Island?

Long Island Association president and CEO Matt Cohen expressed concern about how the trade wars might add to the already high cost of living in the region.

“While the purported goals of the Trump tariffs are economic independence and national security, the steep increases combined with the threat of retaliatory tariffs will create a perfect storm of economic uncertainty for Long Island businesses, and their price increases will trickle down to consumers, further exacerbating our region’s affordability crisis," he said in an emailed statement.

Canada is the largest export market for Long Island companies, according to the LIA, with exports from Nassau and Suffolk counties valued at nearly $1.5 billion annually.

Long Island economist John A. Rizzo, however, suggested that prices may not rise as much as feared — although an escalating trade war could lower exports and threaten jobs.

Companies could seek substitutes for imported goods or exporters might cut prices to avoid losing sales, he said, adding: “Only for goods that are really necessary and for which there are no good substitutes will the tariffs have a strong inflationary effect.”

The impact to the economy will be determined by how consumers respond to higher prices, Rizzo said, because 70% of economic activity on the Island and nationwide is based on consumer spending.

“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," he said. 

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