Unless negotiators can come to a deal over the weekend, a 5 percent tariff on goods imported from Mexico will take effect Monday.
Avocados and tomatoes will probably get a little more expensive because of the tariff, but U.S. consumers will see larger increases on non-agricultural items.
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Since the North American Free Trade Agreement was adopted in the 1990s, manufacturers have integrated their supply chains across Mexico, the U.S. and Canada. Last year, the biggest import from Mexico was vehicles and their components.
Wires, cables and conductors are also major imports from Mexico, as are household appliances and heating and cooling systems. Even brands like Chevrolet, Dodge, Frigidaire and Whirlpool that are generally considered American have products that are partly built in Mexico.
A 5 percent tariff might not sound like much, but Mike Walden, an economist at North Carolina State University, said it will bite into razor-thin profit margins for a lot of manufacturers.
"The analysis that's been done so far suggests that we are seeing impacts on U.S. companies, and they can increase prices," Walden said. "We've seen, for example, washing machine prices already go up. So, I think we will feel it here in the U.S."
Many companies are already squeezed by the 25 percent tariff war with China, he said, and U.S. economic growth will slow if the Mexico import tariff ever gets that high.
North Carolina imports about $7.7 billion a year of goods from Mexico, ranking the state eighth in the country. The imports make up only about 1 percent of the state economy.
"There’s no doubt that we need to fix our immigration system, but these tariffs are the wrong approach," Gary Salamido, acting president of the North Carolina Chamber, said in a statement. "Too many North Carolina jobs rely on a strong trade relationship with Mexico. Our state’s employers, manufacturers and consumers can’t afford the devastating impact of this policy."
Walden said he also worries about possible retaliatory tariffs from Mexico on U.S. goods. The country is one of North Carolina's top export markets for agriculture, a sector that's already feeling the bite from Chinese tariffs.
A number of people on WRAL's Facebook page defended the tariffs on Mexican goods, even though they recognize U.S. consumers will ultimately pay the price.
"Tariffs increase U.S. jobs. FACT," wrote Allen Williams.
"The analysis is just the opposite," Walden said. "It makes doing business in the U.S. more expensive. Things are more expensive. Actually, the analysis is it slows down the economic growth, and it means less jobs are being created."
"Buy USA, and you won't have a problem," Cheryl Peterschick wrote.
"We now have an integrated auto assembly business in North America – Canada, the U.S. and Mexico," Walden said. "Mexico does a lot of the assembly. North Carolina is involved in this in creating auto parts."
"Of course we pay," Teddy Fowler said. "That is why we need to fight now against unfair trade practices of other countries so that we will pay less in the future."
Walden said that seems to be the strategy for China – trading short-term cost for long-term gains.
"Mexico is another thing," he said. "I think this caught everyone off guard that the Trump administration was going to kind merge tariffs and border issues, but if it gets the attention of the Mexican government and they change some things, then the Trump administration may very well say they won."