Tariffs on Mexico and Canada took effect today ahead of President Donald Trump's address at a joint session of Congress.
This comes with the backdrop of economic uncertainty as Americans brace for higher costs on everything from produce to electronics.
All three countries have since announced retaliatory tariffs.
"Uncertainty is really spread across businesses and households because we don't know how much things are going to cost in the future," said Caleb Silver, editor-in-chief of Investopedia. "So when you have pricing uncertainty, but you know that prices are going to rise, that causes the pullback in spending across the board."
Silver said the stock market has been selling off for the last couple of weeks with the announcement of tariffs. Now that they're in place, as well as retaliatory tariffs, there was another sell off.
"Investors don't like uncertainty. And tariffs bring inflation and uncertainty with them," said Silver.
Adding to growing concerns about inflation, major retailers Target and Best Buy announced price increases likely to begin in the coming weeks, citing the increased costs of products that come from Mexico, China and Canada.
"Supply chains are very long term, somewhat brittle things to manage. And so companies make a lot of long term assumptions around where they're going to source raw materials and supply," said Bob Carpenter, president and CEO of GS1 US, a non-profit that creates data, transparency and standards for supply chains globally.
Carpenter said companies are thinking through their options to adjust their supply chains and running scenarios to find what the costs are to change and if they're worth it.
"It's very hard to pivot because, again, these are relationships that have gone back decades for many industries," Carpenter said.
Carpenter said a lot of the conversation now is about near-shoring — keeping supplies near their destinations.
"But some of the challenges around near shoring is really the constraints and infrastructure," he said. "These are massive changes in infrastructure that have big risk and don't happen overnight."
Carpenter said one of the effects could be less options for consumers. Manufacturers may stop making certain products, similar to what happened during the pandemic. It was more affordable for manufacturers to consolidate demand into fewer products.
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Meanwhile, President Trump's economic approval ratings are sliding. He ran on an economic platform, promising to lower the cost of living. A promise most Americans don't feel he's keeping.
According to a February Gallup poll 54% of Americans disapprove of the president's economic stewardship and a Reuters/Ipsos poll last week shows only 30% of people think the national economy is going in the right direction.
