Americans’ frustration with inflation may have helped Donald Trump win the White House, but the president-elect may be stoking future price growth before he even takes office in January.

On Monday, Trump announced he would impose broad new tariffs on Canada, Mexico, and China in an effort to crack down on illegal immigration and drugs. All products entering the U.S. from Canada and Mexico would face a 25% tariff, he said on Truth Social, and goods from China would see an additional 10% levy.

"Most people don't understand that if you impose tariffs, that actually raises prices," said Dana Peterson, chief economist at The Conference Board. "It's not uncommon for people to vote based upon things that are not essentially associated with their economic good, right?"

In 2023 dollars, the tariffs announced Monday would erode the purchasing power of the average American household by $1,200, says Ernie Tedeschi, director of economics at the Yale Budget Lab.

Though consumers may be able to shift some spending patterns – from items that are imported to domestic versions, for example – that’s not possible with every category of consumer goods, Tedeschi said.  

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One example is agriculture. The United States is Mexico’s largest agricultural trading partner, buying about 92% of Mexican exports in the category, according to data from the U.S. Department of Agriculture. If the cost of discretionary items like electronics or apparel goes up, consumers might be able to delay or skip those purchases, Tedeschi said. But tariffs on fresh food will be harder to substitute, at least in the short term, while retailers search for other suppliers, he noted.

The overall inflation estimate also doesn’t take into account the fact that a substantial portion of imports are raw materials – lumber and oil from Canada, for example. “These are inputs into the production process and those have the potential to actually be more inflationary in the short run,” Tedeschi said.

Though importers are most likely to pass the tariffs on to consumers in the form of higher prices, “we’re going to see domestic competitors saying, well they’re doing it, we can do it too,” said Jennifer Lee, senior economist and managing director at BMO Capital Markets. That would narrow the choices for consumers.

And if Americans try now to get ahead of higher prices later, it could stoke inflation in the short term as prices rise to meet higher demand, Lee notes. “It is possible that we could see some pulling forward,” she said. “We saw that ahead of the port strike as well.”

While consumers may stockpile toothpaste, companies don't have that option, Peterson said. "You plan your inventories months in advance."

How will inflation affect interest rates?

It's possible the tariff threats are just a negotiating tactic, Peterson said. And it's also important to remember that many companies will be able to apply for exceptions to the tariffs: if their industry is crucial to national defense, for example.

But for consumers who used the ballot box as a vote against inflation, the timing of the tariff announcement is striking, Lee said. "This is all coming at a time when inflation has been appearing a bit stickier," she said. "Fed Chair Powell sounded a little bit less dovish last time he spoke. With potentially higher inflation, the Fed is going to be less willing to ease policy as quickly as they were before."