Washington DC - US President Donald Trump's sweeping tariffs on Canada and Mexico are set to roil supply chains for products ranging from cars to avocados as industries bracing for cost increases.

US imports from both countries covered nearly $900 billion in goods as of 2023, and supply lines between the three North American neighbors – who share a trade agreement – are deeply integrated.

Fresh tariffs pose complications for businesses with a footprint across one or more countries.

Analysts expect Trump's 25% across-the-board tariffs on Canada and Mexico would hit the automobile and electronics sectors hard.

Donald Trump Trump says Venezuela to accept deported migrants, including gang members

While Canadian energy exports have a lower 10% rate, this still marks an uptick as Washington previously did not impose tariffs on Canadian oil imports.

Mexico and Canada also account for significant US agriculture imports, meaning the duties could add to the prices of popular foods like avocados and tomatoes.

Nearly 80% of Canadian goods exports go to the US, amounting to some $410 billion in value, according to Statistics Canada.

The levies will hit Canadian vehicle and energy industries hard, given that they represent over 40% of Canada's exports to the US.

The energy exports involve mainly crude oil and bitumen as well as natural gas.

Donald Trump Trump reportedly sets punishment for FBI agents involved in his criminal cases

The auto sector in Ontario – the nation's most populous province – faces particular challenges.

This is because "various parts cross the border multiple times before ending up in a finished product," said Robert Kavcic, at the Bank of Montreal, in a research note.

The US imports construction materials from Canada, too, meaning tariffs could drive up housing costs.

More than 70% of imports of two key materials homebuilders need – softwood lumber and gypsum – come from Canada and Mexico, said National Association of Home Builders chairman Carl Harris.

"Tariffs on lumber and other building materials increase the cost of construction and discourage new development," he said.

Mexico's exports to the US represented 84% of the goods it sold to the world last year, according to its National Institute of Statistics.

This amounts to over $510 billion.

The auto industry spanning vehicles and parts, alongside the electronics and machines sector, will likely see the greatest impact.

They send around half of all their production to the US, analysts from Capital Economics said.

The latest 25% tariffs would also affect sectors like food.

Mexico supplied 63% of US vegetable imports and nearly half of US fruit and nut imports in 2023, according to the US Department of Agriculture.

More than 80% of US avocados come from Mexico – meaning higher import costs could push up prices of items like guacamole.

Trump invoked emergency economic powers in imposing tariffs on Canada, Mexico, and China, arguing they had failed to stem the flow of illegal immigrants and drugs into the US.

Chinese goods faced an added 10% tariff under the latest announcement.

But analysts have said that US tariffs on Canadian and Mexican imports could be incompatible with the US-Mexico-Canada Agreement (USMCA), a trade deal Trump inked during his first presidential term.

Some anticipated that Trump's posturing could be a way for Washington to gain an upper hand ahead of a 2026 deadline to review the USMCA.