So is everyone ready to pay more for stuff? Because that certainly seems like what is next on the agenda for the American consumer. We'll be paying more for food in the grocery store, more for electronic goods, and a whole bunch more for cars, starting tomorrow.

Or maybe not. You never know what's going to happen, since American trade policy will now be decided on a whim. By a man who simply does not understand how world trade works. Isn't that a comforting thought?

President Donald Trump proudly displays this ignorance repeatedly. To him, a trade deficit with another country means they are "ripping us off" or that we are "subsidizing" them. To him, tariffs are paid "by the other country," which doesn't affect the prices consumers pay one bit. Neither one of these things are the least bit true, but nobody seems to be able to explain these basic lessons of economics to him.

This is all in the news because tomorrow Trump might just levy 25 percent tariffs on everything (or maybe just some things) from both Mexico and Canada. The key word there is "might," because nobody knows whether they will in fact be announced or whether Trump will punt the deadline another month. When he first announced his tariff plans, the leaders of both countries called him up (and calmed him down) and he gave them a month before the tariffs would go into effect. That month is up tomorrow, but who knows what Trump will ultimately decide?

There's an old saying that "when all you have is a hammer, every problem starts to look like a nail" that seems to apply here. Trump loves tariffs for one big reason above all else -- he can levy them without involving Congress at all. It's all on his say-so, which is just how he likes it. Trump's announced reason for these tariffs was to secure the borders and halt the flow of fentanyl into America. But this is a little ridiculous for Canada, since there never has been a crisis of any sort on our northern border (with regards to people entering), and the amount of fentanyl smuggled in from Canada is miniscule (less than one percent of what enters from Mexico).

At times, Trump seems to relish permanent tariffs bringing in tons of money and somehow solving our budget problems. At other times, Trump seems to wield the threat of tariffs as bargaining leverage against other countries (often for unrelated issues). Or merely to force other countries' leaders to butter him up with lots of fawning praise. Or perhaps it is to protect American industries? The rationale shifts -- it is never consistently one thing or another.

The outcome (if the tariffs are actually applied for an extended period of time) is going to be higher prices for American consumers, though. That much is clear. If a product is made or grown in a foreign country and sold for a profit here, it means that the company that produces it can do so at a cheaper rate than it can be manufactured or grown here. So even assuming for the sake of argument that American companies could somehow immediately replace those imported products on the market, by definition it means that those products will be more expensive. And the people who sell these products aren't going to do so at a loss, so that price hike will be passed on to consumers, in the form of higher prices for cars or vegetables or beer or whatever else.

Or perhaps American companies can't just throw some magic switch and start producing the product here at home (because they've got to build a new factory to do so, for instance), which means that the foreign supplier will still be selling the same product to American consumers -- but now with a premium added to cover the cost of the new tariff. Which means, once again, prices go up for Americans.

Consumers are the ones who pay the costs of tariffs, plain and simple. Not the government of either Mexico or Canada. The tariff adds to the price of goods, which makes it more expensive to produce, and therefore the company that sells the end product raises the price to the consumer to cover the new cost.

The Washington Post has a good article today which maps out some examples of what this could mean for automobile parts. One of their examples starts with aluminum smelted in Québec (where it is less expensive to do so because electricity is cheap and plentiful there). The ingots then travel to Mexico, where they are cast into molds (which is cost-effective to do there because labor is cheap). These rough casings then travel back to Canada, where they are precision-machined. They then enter the United States and are assembled into a rear differential assembly in North Carolina, before finally winding up in a plant in Indiana where the whole thing is installed into a new truck. Another example follows steel produced in Pennsylvania down to Mexico, back to Michigan, up to Canada, and then back to Kansas City before winding up in a Ford F-150's suspension. And those are just two parts out of the tens of thousands required to make a new car. Paying 25 percent every time such a part crosses the American border would add thousands of dollars to the price of a new car.

Of course, all those plants in Canada and Mexico could move to the United States. But not instantaneously -- getting a factory built and tooled-up can take years. It would also require a lot of investment money to be spent. And even when it does get up and rolling, the parts they make will (again, by definition) be more expensive to make here. So even if this were all to happen in the blink of an eye, the cost of a new car would still go up for the American consumer -- just perhaps not quite as much as with the tariffs.

This are just a few examples from one industry, mind you. But the tariffs won't only hit auto makers, they'll hit across a wide range of products -- such as the lumber needed to build new houses, for instance. Which means the price on a huge range of products could go up sharply for Americans very soon.

There's a specific term for prices going up across a broad range of industries simultaneously, leading to price hikes for consumers -- it is called "inflation." Inflation has already ticked up a bit under Trump's watch, and it could go a lot higher very quickly if he does follow through with his tariffs on Mexico and Canada.

This is already having a negative impact on an important index of manufacturing activity, ever since Trump announced the tariff plan right after he first took office (and even though he postponed them for a month):

The [Institute for Supply Management's] Manufacturing Purchasing Managers Index for February was 50.3, down from 50.9 the month before, and below Wall Street's expectations. Input prices rose at their fastest pace since mid-2022, when consumer price inflation was at a 40-year high.

"Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery stoppages and manufacturing inventory impacts," [I.S.M. chair Timothy] Fiore said. "Although tariffs do not go into force until mid-March, spot commodity prices have already risen about 20 percent."

In midafternoon trading Monday, the Dow Jones Industrial Average was down more than 1.5 percent.

As the president deliberated, analysts and executives tried to read the administration's tea leaves.

Many importers have refrained from rearranging their supply chains while they wait for a clearer signal from the White House.

Please note that bit about the Dow sinking. Big Business hates uncertainty, since they must make their business plans years in advance. But with Trump's "on again, off again" tariff threats, this becomes impossible to do. What are they supposed to do if Trump levies the tariff, but then in another month or two lifts them again because he is now satisfied with the borders? How are you supposed to plan for that?

The worst case scenario here is that Trump's tariffs (worldwide, not just on our two closest neighbors) disrupt the economy to such an extent that we enter an entirely-avoidable recession. But even the best case scenario is that we manage to avoid a recession while prices still go up for American consumers, causing at least a short-term rise in inflation. Even if Trump decides to wait another month, if industry stops producing goods to any extent it will lead to a smaller supply -- and when supply goes down but demand stays the same, prices will go up.

Consumers are already negatively reacting. The concept of tariffs is not popular, to put it mildly. Democrats, during the election campaign last year, took to calling this a "Trump tax" on everything. If the tariffs do go into effect tomorrow, I would hope they start using this term again, whenever they talk about the economy. Because a whole lot of people who voted for Trump did so in the hopes that prices would go down -- not up.

-- Chris Weigant

Follow Chris on Twitter: @ChrisWeigant