The 25% tariffs on Canadian and Mexican goods, and a separate 10% tariff on all other imports, may cause prices on around a quarter of all consumer spending to rise 0.81% if businesses pass along half the costs, or 1.63% if the costs are fully transferred, according to a Federal Reserve Bank of Atlanta study.

US President Donald Trump has imposed 25% tariffs on products entering the US from Canada and Mexico and has increased a levy on goods coming from China. Canadian Prime Minister Justin Trudeau announced retaliatory tariffs on US exports and warned that a trade war would be costly for both countries.

U.S. Commerce Secretary Howard Lutnick told Fox Business on Tuesday that President Donald Trump will reach a middle ground with Canada and Mexico on tariffs and an announcement to that effect was expected on Wednesday.