The president also said he's imposing a 10% tariff on China, in addition to fees already in place, and that tariffs will eventually be levied on the European Union.
Tariffs are import fees which in most cases are passed on to consumers.
In a White House press briefing, Trump cited trade deficits as a key reason for the new tariffs. He also blamed Mexico, Canada and China for the flow of fentanyl into the United States, an illegal drug which has sickened and killed millions of Americans.
"A lot of fentanyl comes through Canada, and China makes fentanyl," he said.
Petroleum refineries in the Midwest are reliant upon Canadian crude and can't easily switch to other types.
"For a real-time reading of how much tariffs are likely to affect our finances, just watch the price at the pump,” said Brian Jacobsen, chief economist for Annex Wealth, a Brookfield-based investment management firm.
Trump vowed to place "a lot of tariffs" on imported steel, aluminum and copper. It will, he said, "be a great boost" to the American steel industry. He also vowed to place tariffs on foreign pharmaceuticals and computer chips.
"The tariffs are going to make us very rich and very strong," the president said.
Consumers could see higher prices
But tariffs could raise the cost of imported goods like vehicles, appliances, medicine, clothing, food and fuel, hitting household budgets already strained from inflation.
In 2023, Mexico supplied 63% of U.S. vegetable imports and 47% of fruit and nut imports, according to the U.S. Department of Agriculture. Mexico is the world’s largest exporter of tomatoes and avocados, with much of those crops destined for the United States.
Mexico and Canada make many of the vehicles sold in the United States and have strong ties to U.S. parts makers.
American companies could lose valuable business in Mexico, Canada and China as the three countries, in retaliation to Trump's actions, make lists of American products to impose tariffs on.
“I would be most concerned about retaliatory tariffs,” Jacobsen said.
“In the past, farmers and small businesses have gotten caught in the crossfire of trade wars. If the U.S. government then needs to subsidize these businesses to offset some of the damage, then the trade war becomes a lot more costly,” he added.
Businesses have accelerated purchases of imported goods to squeeze them in before tariffs are applied, but that’s only a temporary solution if tariffs become a permanent fixture of the Trump administration.
However several factors could cushion the effects, such as exchange rate movements, the availability of product substitutes, and the willingness of companies to absorb higher costs.
"A lot can happen in a short period of time, so I don't think this is the final word on tariffs," Jacobsen said. "We will have to see what the actual executive orders say. The comments to the press seemed to be a laundry list of ideas instead of a recitation of what is going to be in an executive order."
Still, even the threat of tariffs and counter tariffs is unsettling, said Missy Hughes, Secretary and CEO of the Wisconsin Economic Development Corp.
"This creates tremendous instability for Wisconsin businesses," Hughes said. "Tariffs are going to be devastating in terms of adding to inflation and the cost of things. For families, this is going to mean increased costs at the grocery store and at the gas pump."
Tariff supporters say the import fees, when prudently applied, shield American manufacturers from unfair foreign competition.
"We already have tariffs on steel, and we've saved our steel industry. But that (tariff) was relatively small compared to what it will be," the president said.
Wisconsin has seen examples of tariffs assisting a few industries threatened by Chinese government subsidized competition.
However, some business groups have warned that broadly applied tariffs on Mexico, Canada and China would be ineffective and costly.
"If imposed, tariffs themselves would not solve our border problems and instead would send prices soaring, costing the typical American family more than $1,000, with significant harm to U.S. manufacturers, farmers, and ranchers." John Murphy, a senior vice president at the U.S. Chamber of Commerce, said in a statement.
Veterinary collars are made at NovaLink in Matamoros, Mexico. NovaLink, which has about 2000 employees, produces products ranging from textiles, water meters, aircraft seats and wiring harnesses for partner companies. Most of these companies are based in the U.S.
Businesses need Mexico as supplier and customer
Mexico and Canada are Wisconsin’s two largest trading partners, supporting a combined $25 billion in cross-border trade in 2023, according to the most recent available figures. China is the state's third largest trading partner.
Mexico has been pursued by U.S. manufacturers seeking low-cost labor, tariff-free trade zones, and the benefits of being near the American marketplace without the higher costs of American manufacturing.
Mexico is an important supplier and customer for Wisconsin makers of vehicle parts, medical devices, factory automation equipment, household goods and much more.
A recent poll by Wisconsin Manufacturers & Commerce showed that 56% of business leaders opposed tariffs on Mexico and Canada even as 86% supported tariffs on China.
The results were consistent with a WMC poll during the first Trump administration.
“Many of our members, particularly manufacturers, have relationships in Mexico. They have plants and facilities or a supply chain there,” said Kurt Bauer, president and CEO of Wisconsin Manufacturers & Commerce.
Bauer said his first choice would be for American companies to manufacture their products in the United States. However for national security and other reasons, he said, Mexico is a better choice than China.
Wisconsin exports to Mexico reached an all-time high of $4.3 billion in 2023.
Imports from Mexico that year totaled around $6 billion.
Many products assembled in Mexico are made from U.S. parts, so even Mexican imports benefit American companies that produced those parts, supporting jobs on both sides of the border.
Our relationship with Canada has been strained
In 2023, Wisconsin exported $8.5 billion in goods to Canada, exceeding the state’s total exports to Mexico, China, Germany and the United Kingdom combined.
Industrial machinery, electric motors and generators, medical and scientific instruments, vehicle parts, and paper were among the top items Wisconsin sent to Canada. Some of the $6.3 billion in imports included oil and gas, automobiles, lumber, fertilizers and plastics.
Canada is an important destination for Wisconsin farm products, although at times the relationship has been strained by tariff disputes. Some dairy exports to Canada have been subject to steep tariffs of nearly 300%, shielding Canadian farmers from foreign competition.
In the first Trump administration, members of Congress from Wisconsin and New York claimed that Canada unfairly blocked U.S. exports of ultra-filtered milk, a protein liquid concentrate used to make cheese.
Canadian farmers blamed the U.S. for producing too much milk in a global marketplace flooded with it.
Now, a combination of tariffs, farm worker deportations and other reasons could trigger a $6 billion loss in profits for U.S. dairy farmers over the next four years, said Charles Nicholson, a dairy economist with Cornell University in Utica, New York.
“If you pick a trade fight with our major export destinations — Mexico, Canada and China — and they decide to retaliate, that has some substantive negative implications for dairy farms and processors,” Nicholson said.
