President Donald Trump is on the verge of slapping new tariffs on Canada and Mexico while doubling a levy on China, moves that would dramatically expand his push to reshape the US economy, tap new revenues and upend ties with the biggest US trading partners.
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The long-promised tariffs scheduled to take effect Tuesday would easily be among the most sweeping of the Trump era, applying to roughly $1.5 trillion in annual imports. They would put a 25% tariff on all imports from Canada and Mexico, except Canadian energy, which would face a 10% rate. He has also said he’ll double a tariff on China to 20%.
The tariffs may yet be delayed — the Canada and Mexico measures were already stalled once — but any reprieve could prove temporary, with a host of other Trump levies due in April. Trump says the tariffs are a tool to bring the neighboring nations to heel on securing the borders from migrants and drugs, particularly fentanyl.
Commerce Secretary Howard Lutnick said Sunday that both Canada and Mexico have been working hard on controlling the border but fentanyl was still an issue and the tariffs were contingent on both being resolved.
“They have done a lot, so he’s sort of thinking about right now how exactly he wants to play with Mexico and Canada and that is a fluid situation,” Lutnick said on Fox News’ Sunday Morning Futures, speaking of Trump. “There are going to be tariffs on Tuesday on Mexico and Canada, exactly what they are, we’re going to leave that for the president and his team to negotiate.”
A slate of new tariffs may help raise revenue for some of the tax cuts Trump wants and lay to rest, at least for now, the theory that Trump’s brazen threats were bluffs to use as negotiating leverage.
Yet they also threaten to reignite inflation that the Federal Reserve is finding stubborn, throw North American supply chains into disarray — especially the auto industry — and invite legal challenges based on a continental free-trade pact Trump himself renegotiated during his first term.
Trump’s plans also risk weakening a US economy that is already showing signs of strain. Stocks and cryptocurrencies have fallen from recent record highs, consumer confidence dropped sharply and inflation continues to simmer. A fresh tariff war threatens to trigger a wider sell-off.
The tariffs on Canada are nearly across the board, save for Canadian crude oil, natural gas and other energy products, which are 10%. Prime Minister Justin Trudeau’s government has mused about applying its own export tax to crude to make sure US drivers feel the pain of Trump’s trade war. It’s not yet clear if they will, and Trudeau is about to leave office.
Explainer: What Trump Aims to Achieve With His Tariff Plans
Last October, the Canadian government imposed 100% tariffs on Chinese-made electric vehicles and 25% tariffs on a list of Chinese steel and aluminum products.
“We will continue to work to ensure to do everything we can to make sure that there are no tariffs on Tuesday, but if ever there were tariffs on Tuesday, as we have all seen — as we were ready to do last time — we will have a strong unequivocal and proportional response as Canadians expect,” Trudeau said Sunday.
The proposed Trump tariffs on Mexico apply to all imports. President Claudia Sheinbaum has weighed her own steps to stave them off, including potential new tariffs on China. Treasury Secretary Scott Bessent called it “very interesting” and encouraged both neighbors to do so. Canada has announced similar measures previously.
US-Mexico talks on security and counter-narcotics are further advanced than on trade and tariffs, two people familiar with the discussions have said. In a bid to show its willingness to cooperate with the US on security, Mexico on Thursday handed over 29 people accused of drug trafficking and other crimes to face charges in the US. Mexican officials thought that could be enough to buy them more time before tariffs were imposed and allow for talks on trade relations to continue, according to a person familiar with the matter.
Trump is also planning other streams of tariffs based on reports due to him by April 1. One is for so-called “reciprocal tariffs,” under which Trump will charge country-by-country rates, based on calculations such as another country’s tariffs, trade barriers and tax regimes. It’s not clear whether the “reciprocal” calculation would include any tariffs already in place, such as the Mexico and Canada measures that Trump has tied to border security.
“We are going to evaluate that and give them an opportunity to remedy that, so we could either see a ratcheting up in tariffs, or if our trading partners want to remedy what has been unfair trade, then we can see the tariffs come off,” Bessent said on CBS’s Face the Nation.
Another stream is a series of tariffs on specific sectors. That includes a 25% tariff on steel and aluminum due to take effect March 12, and which would heavily affect Canada and Mexico.
Trump is also planning sectoral tariffs on autos, semiconductor chips and pharmaceutical drugs, all of which could be imposed as soon as April 2. He launched an investigation that could lead to new copper tariffs later this year. And on Saturday, he ordered the Commerce Department to investigate the national security harm posed by lumber imports, laying the legal groundwork for new tariffs — ones that again appear aimed at Canada.
Canada and Mexico have both worked to head off tariffs, though what more they can do isn’t clear. Canada appointed a fentanyl czar and dedicated new measures to border security, as Trump had asked. Trump says it’s not enough, and a White House official has said the metric Trump is watching is domestic deaths from fentanyl.
It has all sown confusion on what, if anything, Canada can offer to stave off a trade war, given that only 70 pounds (31.8 kg) of fentanyl have been seized on or near the US’s northern border since October 2021 and it has imposed existing and pledged curbs on China.
Any tariffs are poised to include at least some retaliation that would hit U.S. exporters. Canada — where outrage over Trump’s threats is leading consumers to already avoid US goods — plans to immediately impose retaliatory tariffs on C$30 billion ($20.75 billion) in US goods, with levies on another C$125 billion ($86.4 billion) to follow three weeks later. Mexico has not spelled out any retaliation plan.
China, too, said the US should focus on “reducing domestic drug demand” and increase law enforcement to curb domestic fentanyl use.
“The unilateral tariff increase by the U.S. seriously violates WTO rules and is a typical act of unilateralism and trade protectionism,” The Chinese Embassy said in a written statement.
--With assistance from Brian Platt, Jacob Gu, Derek Decloet, Nancy Cook, Maya Averbuch and Carolina Millan.
(Adds detail on Mexican efforts to stave off tariffs in 13th paragraph)
