Trump announces 25% tariffs on Mexican and Canadian imports, effective Tuesday

Shreedhar Rathi | Mar 04, 2025, 09:00 IST
Trump announces 25% tariffs on Mexican and Canadian imports, effective Tuesday
( Image credit : AP )
President Donald Trump has confirmed a 25% tariff on imports from Mexico and Canada starting Tuesday, aiming to address fentanyl trafficking, illegal immigration, and trade imbalances. This move, which includes a 10% duty on Canadian energy products, has sparked fears of a North American trade war. Canada plans to retaliate with 25% tariffs on U.S. goods, escalating tensions.

President Donald Trump confirmed on Monday that a 25% tariff on imports from Mexico and Canada will take effect Tuesday, reigniting concerns of a North American trade war. The decision, aimed at addressing fentanyl trafficking and illegal immigration, also seeks to reduce trade imbalances and encourage U.S. manufacturing.

The announcement sent U.S. stock markets tumbling, with the S&P 500 dropping 2%. Despite potential inflationary pressures, the Trump administration remains confident in tariffs as a tool for economic growth, citing increased foreign investment. Commerce Secretary Howard Lutnick pointed to TSMC’s U.S. expansion as evidence of tariffs driving business to American soil.

While Trump previously granted a one-month delay as Mexico and Canada pledged concessions, he stated Monday that no further extensions would be granted. The new tariffs will also include a 10% duty on Canadian energy products such as oil and electricity.

Canadian Prime Minister Justin Trudeau criticized the tariffs, arguing they would raise costs for American consumers and violate existing trade agreements. Canada has vowed to retaliate with 25% tariffs on $155 billion in U.S. goods, beginning with $30 billion in immediate levies after midnight Tuesday.

Mexican President Claudia Sheinbaum acknowledged Trump’s authority over the decision but emphasized that Mexico has a response plan in place. In recent weeks, Mexico deployed 10,000 National Guard troops to combat drug trafficking and illegal immigration, while Canada appointed a fentanyl czar.

The tariffs follow Trump’s February decision to impose a 10% levy on Chinese imports, which will double to 20% on Tuesday. Treasury Secretary Scott Bessent suggested that China would absorb the tariff costs rather than passing them on to U.S. consumers. However, major corporations such as Ford and Walmart, along with economic analysts, have warned of rising prices and supply chain disruptions, estimating an average household could face over $1,000 in additional costs.

Democrats swiftly condemned the tariffs, arguing they will worsen inflation and strain U.S. relations with key allies. Senate Democratic Leader Chuck Schumer accused Trump of exacerbating voters’ economic concerns, while Sen. Amy Klobuchar criticized the move for harming American farmers.

Trump is also set to introduce “reciprocal” tariffs in April, which would match the trade policies of other nations, including subsidies and value-added taxes. Additionally, the administration plans to remove exemptions on steel, aluminum, automobiles, computer chips, copper, and pharmaceuticals, escalating tensions in global trade.

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