On 3 March, President Trump announced that he proceeded with tariffs implementation on Canadian and Mexican imports under the International Emergency Economic Powers Act (IEEPA) to secure the country’s borders against illegal migration and drug smuggling, including the highly poisonous fentanyl. The 25% additional tariff on all imports from Canada, excluding energy products, and the 25% additional tariff on all imports from Mexico came into force on 4 March.
Imported energy resources from Canada are subject to a 10% tariff. The 10% tariff on all imports from China came into effect on 4 February but the President doubled the tariff on Chinese products to 20% on 4 March.
The Trump administration had announced 25% tariffs on steel and aluminium imports in February, which were set to take effect on 4 March.
The tariffs will remain in effect until the situation with drugs and illegal migration improves, according to the President. He also stated in his address to Congress on Tuesday that the United States has trade deficits with Canada and Mexico, which provided another reason for tariffs’ imposition. President Trump added that there could be some disturbances from the tariffs. The stock market has already faced sharp declines early this week. US citizens are concerned about inflation and the potential impact on businesses. Mr. Trump claimed that farmers would benefit from reciprocal tariffs on countries that have imposed tariffs on US exports and warned that it would take some time for the adjustment period. Americans may start to pay more for groceries, fuel, and cars, and potentially lose jobs. The tariffs will disrupt the highly successful trading relationships with Mexico, Canada, and China.
China and Canada immediately retaliated. Chinese authorities announced 15% tariffs on a wide array of US farm exports and expanded the number of US companies subject to export controls and other restrictions by about two dozen. Reminder: China had already introduced reciprocal tariffs of 15% on coal and liquefied gas from the USA in early February. Tariffs of 10% were imposed on US crude oil, agricultural machinery, and pickup trucks. The Ministry of Commerce of China stated that the country had introduced export controls on tungsten, tellurium, ruthenium, molybdenum, and goods related to ruthenium during the same period.
Justin Trudeau, the Prime Minister of Canada, announced on 3 March that the actions of the United States administration are unjustified, as the Canadian government had been working relentlessly to address the fentanyl problem. Canada implemented a $1.3 billion border plan with new helicopters, boots on the ground, increased coordination, and resources to stop the flow of this highly poisonous drug. The government appointed a Fentanyl Czar, listed transnational criminal cartels as terrorist organisations, launched the Joint Operational Intelligence Cell, and established a Canada—US Joint Strike Force on organised crime. Mr. Trudeau added that less than 1% of the fentanyl intercepted at the US border comes from Canada after these measures were implemented.
On 4 March, Canada responded with a 25% tariff on $155 billion of US goods. The remaining tariffs on $125 billion of US imports will come into force in 21 days. The tariffs will remain in place until US government withdraws its trade actions. Canadian authorities may pursue several non-tariff measures as well if US tariffs remain in place.
Mexico plans to impose tariffs as well. The government will announce the targeted products and other measures this Sunday. Claudia Sheinbaum, the President of Mexico, plans to speak with Trump this week. Around 80% of Mexican exports go to the United States. Mexico has the most to potentially lose in a trade war with the US, and economists say extended tariffs could plunge Mexico’s economy into a recession.
Howard Lutnick, US Commerce Secretary, announced that President Donald Trump may announce a deal to reduce tariffs on Canada and Mexico on 5 March. Canadian and Mexican government representatives were on the phone with Mr Lutnick on 4 March. They have promised to increase measure to reduce the synthetic opioid fentanyl flows coming into the United States.
However, Melanie Joly, Canadian Minister of Foreign Affairs, responded to Mr. Lutnick’s claims, stating that her office had yet to be contacted about the plan. The pause on tariffs is off the table, according to Howard Lutnick.
Reminder: The President of the United States plans to impose steeper tariffs elsewhere. Trump intends to tax the European Union and likely the United Kingdom. On 18 February, US President Donald Trump announced the introduction of 25% tariffs on the import of cars, pharmaceutical products, and semiconductors. Details of the new tariffs are expected to be announced on 2 April 2025. The President also suggested the possibility of further rate increases throughout the year to encourage companies to move production to the United States. This decision is part of a broader strategy aimed at reducing the US trade deficit and protecting domestic industries.
Tariffs, also known as customs duties, are a form of indirect tax levied on imported goods. The amount of duty assessed on any given import depends on the item’s tariff classification, or commodity code, usually a 10-digit number under the ’Harmonised System’ (HS). The US sets its own duty rates for all tariff codes.