U.S. President Donald Trump has officially enacted long-anticipated tariffs on imports from Canada, Mexico, and China.
On Saturday, he signed an executive order imposing a 25% tariff on goods from both Canada and Mexico, while a 10% duty will apply to imports from China. Notably, energy resources from Canada will face a reduced 10% tariff to mitigate impacts on gasoline and heating oil prices.
The U.S. engages in approximately $1.6 trillion in annual trade with these three nations. Trump aims to leverage these tariffs as tools for negotiating changes in foreign policy, particularly concerning immigration and drug trafficking issues. In a post on X, he invoked the International Emergency Economic Powers Act, asserting that these tariffs are necessary due to the “major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl.”
The implementation of these tariffs is set for 12:01 a.m. ET on Tuesday, with no clear timeline for their potential repeal. A senior administration official indicated that various metrics would be evaluated moving forward. Furthermore, should any of the affected countries retaliate, the tariffs could increase.
While tariffs are typically imposed on foreign goods and paid by U.S. importers, many economists argue that they lead to higher prices for consumers domestically. Nevertheless, Trump has consistently viewed tariffs as essential for negotiating favourable trade agreements and safeguarding American industries.
In recent remarks from the Oval Office, Trump characterised his tariff decisions as “pure economic.” However, concerns about inflation have emerged as these measures could exacerbate existing price pressures. The Commerce Department reported an inflation rate of 2.6% in December, although recent data suggested a more favourable outlook.
Trump has expressed intentions to extend tariffs to additional categories of foreign goods, including microchips and pharmaceuticals, and has indicated he would also impose tariffs on the European Union.
The announcement has drawn criticism from congressional Democrats and business leaders. John Murphy from the U.S. Chamber of Commerce stated that while addressing border issues is crucial, using tariffs under the International Emergency Economic Powers Act is unprecedented and counterproductive.
Economists remain wary about the potential inflationary impact of these tariffs during a time when price pressures seem to be easing.
As tensions rise over these new tariffs, both Canada and Mexico have indicated plans for retaliatory measures against U.S. exports. Canadian Prime Minister Justin Trudeau announced equivalent tariffs on up to $155 billion worth of American goods.