WASHINGTON: Former U.S. President Donald Trump is set to impose tariffs on Canada, Mexico, and China, the U.S.’s three largest trading partners, starting Saturday. The White House confirmed the move, which is expected to have significant implications for global trade and diplomatic relations.
Trump has insisted on imposing 25 percent tariffs on Canada and Mexico, accusing them of failing to curb illegal migration and the flow of fentanyl into the United States. He also threatened a 10 percent tariff on Chinese goods, citing the same issue.
“The February 1st deadline that President Trump set several weeks ago remains in place,” said White House spokesperson Karoline Leavitt. She added, “Both Canada and Mexico have allowed an unprecedented invasion of illegal fentanyl, which is killing American citizens and immigrants.” Leavitt dismissed concerns about exemptions for certain sectors and rejected warnings that the tariffs could spark a trade war.
On Friday, Trump also hinted at future tariffs on the European Union, criticizing the bloc for its treatment of the U.S. during his presidency. “I’m absolutely going to impose tariffs on them,” Trump told reporters in the Oval Office.
In response, Canadian Prime Minister Justin Trudeau vowed an “immediate response” should Trump follow through with the tariffs, while Mexican President Claudia Sheinbaum stated that her government was in close contact with the Trump administration.
While Trump has not outlined the specific mechanisms he plans to use, analysts speculate that he may invoke emergency economic powers, which would allow him to regulate imports during a national emergency. However, this approach could face legal challenges.
Fentanyl, which has been linked to tens of thousands of overdose deaths annually in the U.S., is at the heart of Trump’s decision. China has denied any complicity in the fentanyl trade, while Canada has countered, claiming that less than one percent of the illicit fentanyl entering the U.S. comes from its northern border.
Some analysts believe the tariff threats could be a negotiating tactic aimed at speeding up the renegotiation of the U.S.-Mexico-Canada Agreement (USMCA), but the consequences of dismantling the free-trade zone could be severe. A JPMorgan analysis cautioned that such a move could cause significant economic disruption.
Economic Impact
The imposition of tariffs would likely lead to higher costs for U.S. businesses and consumers, as tariffs are typically paid by importers. According to Wendong Zhang, an assistant professor at Cornell University, Canada and Mexico would bear the brunt of the 25 percent tariffs, with their economies suffering real GDP losses of 3.6 percent and 2 percent, respectively. The U.S. would also experience a smaller GDP loss of 0.3 percent.
Oxford Economics analysts warned that the tariffs could push Canada and Mexico into recessions, with the U.S. also facing a potential slowdown. Mexico’s major exports, including food and beverages, electronics, and transport equipment, are crucial to its manufacturing economy, and Canada is highly dependent on exports to the U.S., particularly crude oil.
Canadian heavy oil, which is refined in the U.S., could face severe tariff consequences, potentially increasing costs for U.S. refiners and driving up gasoline prices.
Tariffs on China
Trump is also considering additional tariffs on Chinese goods, with Beijing previously warning that there are “no winners in a trade war.” During his campaign, Trump suggested the possibility of tariffs as high as 60 percent on Chinese imports.
Financial services firm BTIG anticipates that Trump may continue to raise tariffs incrementally on China. Analyst Isaac Boltansky noted that Trump may alternate between threats and incentives to secure a “grand bargain” with China before the end of his term.
The situation remains fluid, and the exact economic repercussions will depend on how the tariff policies are implemented and the responses from affected countries.
