Donald Trump signs executive order to impose tariffs on Canada, Mexico and China

U.S. President Donald Trump has signed an order imposing hefty tariffs on imports from Mexico, Canada, and China, fulfilling a campaign promise but also raising the likelihood of higher prices for American consumers. Trump declared an economic emergency, imposing a 10% tariff on all imports from China and a 25% tariff on imports from Mexico and Canada, the U.S.'s largest trading partners, although Canada's energy tariff is set at 10%.

All tariffs are being implemented under the authority of the International Emergency Economic Powers Act. The White House stated that Trump's order also includes a mechanism that would escalate tariff rates if these countries retaliate against the U.S., as they have threatened. Already, Mexico has responded by imposing its own tariffs on the United States.

Trump stated that the tariffs are meant to force these countries to do more to stop the flow of fentanyl into the U.S. This also includes pressuring Canada and Mexico to limit illegal immigration into the United States. A White House fact sheet on the tariffs said they would remain in place “until the crisis is mitigated,” but it did not detail what actions the three countries would need to take to receive a reprieve. Trump posted on his Truth Social account that illegal immigration and the flow of drugs are the reason for the tariffs. “We need to protect Americans, and it is my duty as President to keep everyone safe,” he wrote. “I promised during the campaign to stop illegal immigration and drugs from pouring across our border, and Americans overwhelmingly voted to do so.”

Trump has previously said that tariffs would create more factory jobs, reduce the federal deficit, lower food prices, and allow the government to subsidize childcare. “Tariffs are the greatest invention ever,” Trump said at a rally during his presidential campaign. The tariffs are scheduled to take effect on Tuesday, February 4th. Imports loaded onto ships or final means of transport before 12:01 a.m. local time on Saturday will be exempt from the tariffs.

Mexican President Claudia Sheinbaum has rejected U.S. claims that her government is cooperating with criminal organizations and has called on the U.S. to control drug demand within its borders. In a lengthy post on X, she wrote that she had ordered her economy minister to implement tariffs and non-tariff measures to defend Mexico’s interests. “If the U.S. government and its agencies want to solve the serious problem of fentanyl consumption in their country, they can combat the sale of drugs on the streets of their main cities, which they do not do, and the money laundering derived from this illegal activity, which has done so much damage to their people.” The specific details of the retaliatory tariffs are not yet clear. Sheinbaum also emphasized that her government does not seek confrontation with its northern neighbor but rather cooperation and dialogue.

Canadian Minister of Energy and Natural Resources Jonathan Wilkinson posted on X that he wanted to reassure Canadians after Trump’s action. “Canada has done nothing to provoke tariffs,” Wilkinson wrote. “But I want to assure every Canadian: no matter who you are, no matter where you live, we are ready to fight for you. We will always be your defenders.” Ontario Premier Doug Ford said that “Canada has no choice but to fight back, and fight back hard.” The Canadian Chamber of Commerce said that Trump’s decision was “deeply troubling.” “Tariffs will have a direct and immediate impact on the livelihoods of people in Canada and the United States. Tariffs will significantly increase the cost of everything for everyone.” Canadian Prime Minister Justin Trudeau is expected to speak about the implementation of the tariffs in the coming hours. He posted on X: “We didn’t want this, but Canada is ready.” He previously said that Canada was “ready to respond strongly and immediately” if the U.S. proceeded with tariffs.

Chet Thompson, CEO of the American Fuel and Petrochemical Manufacturers, said that U.S. refineries depend on crude oil from Canada and Mexico to produce “affordable, reliable fuels that consumers rely on every day.” “We hope to reach a solution quickly with our North American neighbors to remove crude oil, refined products, and petrochemicals from the tariff list before consumers feel the impact.” The U.S. Chamber of Commerce slammed the tariffs, warning that they would raise consumer prices. In a statement, the group acknowledged that while Trump is correct to focus on securing the border and combating the illegal flow of fentanyl, these tariffs do not solve the problem. “Imposing tariffs under the International Emergency Economic Powers Act is unprecedented, will not solve these problems, and will only raise prices for American families and disrupt supply chains,” said John Murphy, senior vice president and head of international affairs at the Chamber.

Tariffs are a tax on imported goods or foreign goods. Tariffs are usually charged as a percentage of the price the buyer pays to the foreign seller. In the U.S., tariffs are collected by agents from Customs and Border Protection at 328 ports of entry across the country. In 2023, the U.S. imported a total of $1.2 trillion worth of goods from Canada, Mexico, and China. Canada is a major exporter of crude oil, while Mexico exports many fresh fruits and vegetables. Mexico is also the largest exporter of auto parts to the U.S. China is a major exporter of chips used in electronics such as cell phones and laptops. Mainstream economists are generally skeptical of tariffs, viewing them as an inefficient way for governments to raise money and promote prosperity.

Trump insists that tariffs are paid by foreign countries. But in fact, the tariffs are paid by the importers—U.S. companies—and that money goes to the U.S. Treasury. These companies in turn typically pass the higher costs on to their customers in the form of higher prices. This is why economists say consumers usually end up paying for tariffs. If the tariffs imposed by Trump persist, they could lead to a significant worsening of inflation, potentially eroding voters' confidence in the president's ability to lower prices on groceries, gasoline, housing, cars, and other goods as promised. Fresh produce, such as these tomatoes imported from Mexico, could become more expensive for consumers because of tariffs. However, tariffs could hurt foreign countries by making their products more expensive and harder to sell abroad. Foreign companies may have to lower prices—and sacrifice profits—to offset the tariffs and try to maintain their market share in the U.S. Yang Zhou, an economist at Fudan University in Shanghai, concluded in a study that tariffs Trump imposed on Chinese goods caused more than three times the damage to the Chinese economy than the U.S. economy.

These tariffs may not be the last the president implements. Trump is preparing more import taxes, suggesting tariffs will be a continued component of his second term. Last Friday, he mentioned import computer chips, steel, oil and gas, as well as targeting copper, pharmaceuticals, and imports from the European Union—moves that could pit the U.S. against much of the global economy.