US President Donald Trump has announced sweeping tariffs on three of the United States’ largest trading partners, Canada, Mexico, and China, citing an “extraordinary threat” from illegal immigration and drug trafficking.
As per AFP, the White House confirmed that imports from Canada and Mexico will face a 25% tariff, with a lower 10% levy on Canadian energy resources.Additionally, an extra 10% duty will be imposed on Chinese goods, which already face various trade restrictions.
Trump is invoking the International emergency economic powers act, arguing that illegal immigration and the influx of fentanyl into the US constitute a national emergency. The White House stated that these tariffs are intended to hold all three nations “accountable” for halting illegal migration and curbing the flow of deadly drugs like fentanyl.
According to The New York Times, the tariffs are set to take effect on Tuesday, with no exemption process for businesses. Notably, the executive orders contain a retaliation clause that will automatically increase US tariffs if any of the affected nations impose countermeasures.
The tariffs have sparked strong reactions from US allies and trade experts.
Canadian Prime Minister Justin Trudeau has vowed a “purposeful, forceful” response, while Ontario premier Doug Ford warned that “the impact of these tariffs will be felt almost immediately,” potentially leading to job losses and economic slowdowns.
Mexican President Claudia Sheinbaum has assured the public that Mexico is “prepared for any scenario” and has met with business leaders to discuss possible responses.
Industry analysts predict significant disruptions to supply chains, particularly in the automotive, energy, and food industries. As per S&P Global Mobility, about 70% of light vehicles manufactured in Canada and Mexico are destined for the US, meaning tariffs will likely increase production costs, potentially leading to higher prices for American consumers. Additionally, experts warn that tariffs on Canadian oil could lead to higher energy costs, particularly in the US Midwest, where refineries process large amounts of Canadian crude.
Economists have expressed concerns that these tariffs could fuel inflation.
Gregory Daco, chief economist at EY, predicts the tariffs will cause inflation to rise by 0.7 percentage points in the first quarter of the year before stabilising. The New York Times reports that analysts estimate American households could see an annual cost increase of up to $3,342 due to the tariffs.
Despite these warnings, Trump defended his decision, writing on social media, “We need to protect Americans, and it is my duty as President to ensure the safety of all.” His administration argues that tariffs will strengthen American industries and reduce dependence on foreign manufacturing.
