Trump Moves Forward with 25% Tariffs on Canada and Mexico

US President Donald Trump has confirmed he will impose 25% tariffs on imports from Canada and Mexico starting from February 1st. The decision is part of his ongoing effort to address trade deficits with both countries, as well as concerns over illegal immigration and the flow of fentanyl across US borders. 

Speaking to reporters in the Oval Office, Trump reiterated the reasons for the tariffs. “Number one is the people that have poured into our country so horribly and so much,” he said. “Number two is the drugs fentanyl and everything else that have come into the country, and number three are the massive subsidies that we’re giving to Canada and Mexico in the form of deficits.”

Trump to decide whether tariffs will be put on oil

Despite the looming tariffs, Trump has yet to decide whether oil imports will be included in the new measures. He stated that the decision would depend on whether Canada and Mexico “treat us properly” and whether the price of oil is deemed acceptable. “Oil is going to have nothing to do with it as far as I’m concerned,” he remarked, but left the door open for further consideration, indicating that a final decision would likely be made “probably tonight.”

The uncertainty surrounding oil imports is particularly significant as Canada is the largest supplier of crude oil to the US, providing over half of the US’s oil imports in 2023. Mexico accounts for an additional 11%. Any tariffs on oil would likely have a ripple effect on prices for businesses and consumers, potentially leading to higher costs for everything from petrol to groceries. This poses a challenge to Trump’s goal of reducing the cost of living, which could be undermined if oil prices rise as a result of the tariffs.

Mexico and Canada to retaliate to tariffs

In response to the tariffs, both Mexico and Canada have already pledged to retaliate. Mexican President Claudia Sheinbaum warned that higher tariffs could result in price hikes for American consumers. Similarly, Canada’s International Trade Minister, Mary Ng, stated that “everything is on the table” in terms of retaliatory measures, including the possibility of export taxes on energy products.

Trump has also indicated that he may take similar actions against China in the near future, as part of his broader strategy to address the global fentanyl crisis. “With China, I'm also thinking about something because they're sending fentanyl into our country, and because of that, they're causing us hundreds of thousands of deaths,” he said. While he has previously floated the idea of imposing a 10% tariff on Chinese goods, no specific details have been released as of yet.

The potential for an escalating trade war looms large, particularly given the already tense relations between the US and China. China's Vice Premier, Ding Xuexiang, has warned against protectionism, advocating for a "win-win" solution that would benefit both countries. However, the US's approach seems unlikely to soften any time soon.

The imposition of these tariffs on Canada and Mexico is expected to have a significant economic impact, particularly for businesses that rely on cross-border trade. With both countries serving as major trading partners, the tariffs could disrupt supply chains and lead to increased costs for US businesses and consumers. As both sides brace for the impact of the tariffs, the situation remains fluid, and further developments are expected in the coming weeks.

While the focus remains on trade imbalances and border issues, the potential ramifications of these tariffs on oil imports cannot be ignored. The US relies heavily on imported oil, and any disruptions to the supply chain could have far-reaching consequences. Trump’s decision on oil tariffs will be closely watched as it could significantly alter the economic landscape for both the US and its North American neighbors. 

As the deadline approaches, businesses and consumers alike are left to wait and see how the situation unfolds and whether the administration will follow through with its full plan. The potential for escalating trade tensions makes it clear that the coming months will be crucial in shaping the future of US foreign policy and trade relations with Canada, Mexico, and China.