Trump’s threat to impose tariffs on Mexican and Canadian imports is a challenge for business and consumers in the Trump-Mexico trade landscape

President Trump is threatening to impose steep tariffs on imports from Mexico and Canada, and that will mean higher prices at the pump, as businesses and shoppers make plans for this weekend.

When he was asked at the White House Thursday if he would follow through with his threat to slap a 25% tax on imports from Canada and Mexico, the president replied: “Yes, I will.”

Many businesses are making contingency plans, despite the size and scope of the tariffs. Trade data released on Wednesday showed a sharp rise in imports in December, suggesting some companies tried to stockpile goods before any tariffs take effect.

Matthew Martdin of Oxford Economics says that people were bringing in goods ahead of time. There are costs and risks to holding inventory. Businesses are very confident that there will be enough demand to keep this inventory on hand for a long time.

Some individual shoppers also tried to beat the tariffs. Spending on durable goods such as automobiles and TVs increased in December according to the Commerce Department. Mexico is a leading producer of flat-screen TVs.

General Motors told financial analysts on Tuesday that it could shift some pickup truck production out of Mexico and Canada if tariffs are imposed. The trade landscape is uncertain, which is why the car company is reluctant to act.

Import tariffs on Chinese and US products could lead to higher costs and lower spending for U.S. consumers, tech companies, and tech companies

“Increasing expenses by 25% is going to lead to higher costs at the pump for U.S. consumers and higher input costs for businesses around the country,” Martin said.

“We don’t think 25% tariffs on Canada and Mexico would be liked by equity markets,” Martin said. Hopefully that hurts the economy and discourages him from going full bore. This may be more of a negotiating tactic.

The countries that were targeted may retaliate with their own tariffs. Canada is reportedly planning retaliatory tariffs targeted at products made in Republican and swing states. Mexico President Claudia Sheinbaum said the country also had a plan in response to potential US tariffs, and Reuters reported that target products were similarly chosen to hit regions that voted for Trump. Again, the US government wouldn’t pay for them, but tariffs could ripple through global supply chains and reduce the demand and value of American products, like what happened to soybeans during Trump’s first term.

Tensions between the US and China have caused some companies to move parts of their supply chain around, including Apple, which moved a portion of its manufacturing to India. But industry groups warn that import tariffs will increase prices for consumers and reduce spending in the US. A Consumer Technology Association analysis said that under Trump’s original 60 percent tariffs on China the prices of a laptop and a phone could go up 69 percent and 37 percent, respectively. Some estimates suggest that higher prices for tech products — many of which are produced in China — could cause consumer spending to drop by billions of dollars.