RICHMOND, Va. — One minute after midnight Tuesday, 25% tariffs on goods imported from Canada and Mexico went into effect and tariffs on goods from China doubled to 20%.
President Donald Trump has said the tariffs are in response to those countries not taking steps to stop the flow of undocumented immigrants and fentanyl into the U.S.
But what impacts will Virginia consumers and businesses feel from those tariffs?
Craig Toalson, CEO of the Home Builders Association of Virginia, said while 7% of all home construction materials are imported from foreign countries, but the two most imported items are lumber from Canada and drywall from Mexico — the countries now impacted by the tariffs.
"It's going to have a significant impact on housing affordability, both the for sale and the rental market."
Toalson says builders can't afford absorb those costs, which will lead to increased prices for projects with the amount depending on what the project is.
"For every $1,000 that we increase the cost of a new home, it prices out 3,800 Virginia households," he explained. "The median new home in Virginia is $461,000 and if we increase that $1,000. [3,800] Virginia households can no longer qualify to purchase a home."
Home building is one of many areas experts say will be see cost increases as a result of those tariffs.
Prof. Jeff Smith, a supply chain expert at VCU, says tariffs are essentially an additional tax importers pay on foreign goods.
"It's going to result in price increases," Smith said. "If their costs go up, so 10%, 20%, 25% they will pass that on through the system."
Smith says the first place consumers will see it is with the food they buy.
"We're in winter, so we don't have a lot of, you know, native production of a lot of our plants, you know, fruits, vegetables, etc. But, we import so many of those from Mexico at this time," Smith said.
If the tariffs continue for an extended period, Smith says it will begin to impact goods like electronics, phones and cars.
"It's been estimated that any end-manufactured car in the United States crosses Canada, United States, Mexico, back and forth, up to 10 to 15 times. And that's just those pieces and that's getting to the end production. But that doesn't count all the parts that come from other parts of the world as well," said Smith.
"I think that as a country, we need to start to understand that putting it on everything isn't the best idea, but maybe selectively picking certain industries or certain products makes sense," Smith explained.
Meanwhile, all three countries impacted by these tariffs have or say they will impose their own retaliatory ones.
Economics Professor Thomas Duncan says that could have impacts on industries like agriculture, including soybeans, which was Virginia's top export in that field in 2023.
"The last time we did this, under the last Trump administration, soybeans became the sticking point for China. And so they actually moved much of their soybean production out of the U.S.," explained Thomas Duncan, associate professor of economics at Radford University. "Just given the history, it'll likely be one of the first things that China's like, 'Well, we did it last time. Watch us do it again.'."
Duncan says it's unknown how long the tariff battle could last — saying it could end sooner if the courts could say the national emergency Trump declared in order to issue the tariffs does not exist. But, if he is allowed to keep the tariffs in place, Duncan said Trump has not been clear in what he wants from the other countries in order to remove the tariffs — making guessing an end date difficult.
"It's sort of a game of both sides will continue to take pains until some side can't withstand the pain anymore, which is not a really fun game to play," Duncan said.
While Toalson says pointing back to the fluctuation his industry faced during COVID, they're in talks with the administration to let them know the sooner, the better.
"We don't want to end up back in that same situation again, where there's just no predictability," Toalson said.
Meanwhile in a statement, the president of the Virginia Chamber of Commerce says they're still assessing the impacts these tariffs will have, but add they're confident it will "create a climate of uncertainty which could generate significant headwinds and ultimately hinder economic growth".
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