Trump to impose new tariffs on Mexico, Canada, and China

The new tariffs could disrupt over $2 trillion in trade, with retaliation expected from key U.S. partners.

A drone view shows trucks lined up near the Zaragoza-Ysleta border crossing bridge as they wait to enter the U.S., in Ciudad Juarez, Mexico, on January 31, 2025. Photo by Jose Luis Gonzalez/Reuters

By Alana Salsabila and Nada Fadiyah

President Donald Trump is preparing to sign an executive order on Saturday imposing significant new tariffs on imports from the United States’ three largest trading partners—Mexico, Canada, and China. The move, which includes a 25% tariff on goods from Mexico and Canada and a 10% tariff on imports from China, could impact more than $2.1 trillion in annual trade.

Speaking from his Mar-a-Lago estate in Florida, Trump reaffirmed that the tariffs are not a negotiation tactic but a firm policy decision aimed at addressing trade imbalances and national security concerns. The White House has set a February 1 deadline for the measures to take effect, signaling an aggressive stance on border security and the fight against fentanyl smuggling.

The decision is expected to trigger strong responses from trading partners, with Canada and Mexico already considering retaliatory tariffs. Economists and trade experts warn that the new duties could increase consumer prices, disrupt supply chains, and strain diplomatic relations.

Why Trump is imposing new tariffs

Trump has framed the tariffs as a response to ongoing issues with illegal immigration and the flow of fentanyl into the U.S. from China, often through Mexico and Canada. He stated that his administration is taking decisive action to protect American interests.

During a press briefing, Trump dismissed the notion that the tariffs were a leverage tool, emphasizing their necessity due to trade imbalances. “No, it’s not… we have big deficits with all three of them,” he said. He also noted that the tariffs could be increased further, adding, “It’s a lot of money coming to the United States.”

While the policy is primarily focused on manufactured goods, Trump acknowledged that oil from Canada may receive a lower 10% tariff instead of the full 25%. However, he hinted that broader tariffs on oil and natural gas imports could be introduced in mid-February, a statement that sent oil prices climbing.

According to U.S. Census Bureau data, crude oil is the United States’ top import from Canada, totaling nearly $100 billion in 2023. The possibility of additional tariffs on energy imports has heightened concerns among industry leaders and economists.

Economic impact and industry concerns

The new tariffs will likely lead to increased costs for American businesses and consumers. Jake Colvin, president of the National Foreign Trade Council, warned that the move could significantly affect the price and availability of essential goods. “Imposing tariffs on key U.S. trading partners could impact everything from avocados to air conditioners to cars,” Colvin said.

Despite Trump's rhetoric about “charging” foreign nations for tariffs, the reality is that American importers will bear the direct costs. These companies may pass the higher expenses onto consumers, leading to price hikes across various industries.

The automotive sector is expected to be among the hardest hit. Many vehicles sold in the U.S. are assembled in Canada and Mexico, with supply chains that involve multiple border crossings before final production. Increased tariffs could drive up manufacturing costs, making cars more expensive for American buyers.

Beyond Mexico, Canada, and China, Trump also hinted at further tariff actions. He mentioned that import taxes were being considered on European goods, as well as on steel, aluminum, copper, pharmaceuticals, and semiconductors. This broad approach to tariffs could have far-reaching consequences for global trade and the U.S. economy.

Immediate retaliation from trading partners

Trump’s decision is likely to prompt swift retaliation from Mexico, Canada, and China. Canada has already drafted a detailed plan for immediate countermeasures, including tariffs on Florida orange juice. A source familiar with the Canadian response indicated that the country could target up to C$150 billion ($103 billion) in U.S. imports. However, Canadian officials plan to hold public consultations before finalizing their response.

Mexican President Claudia Sheinbaum has also signaled a willingness to retaliate but stated that she would “wait with a cool head” for Trump’s final decision. She emphasized that Mexico remains open to dialogue regarding border security and trade relations.

China, while less explicit in its immediate plans, has vowed to defend its trade interests. A spokesperson for the Chinese embassy in Washington issued a statement opposing Trump’s tariffs, warning of potential consequences for both nations. “There is no winner in a trade war or tariff war, which serves the interests of neither side nor the world,” the statement read.

What happens next?

With the new tariffs set to take effect immediately upon Trump’s signature, businesses and global markets are bracing for potential disruptions. The administration has not provided specifics on the implementation process, but White House spokesperson Karoline Leavitt confirmed that details would be published on Saturday.

As the global response unfolds, economists warn that increased trade tensions could lead to further volatility in financial markets. Investors are particularly concerned about the potential for prolonged economic uncertainty, especially if retaliatory tariffs escalate the situation.

For American consumers, the most immediate effect could be rising prices on everyday goods. With tariffs covering a wide range of imports, including electronics, automobiles, and agricultural products, households may soon feel the impact in their wallets.

Despite these concerns, Trump remains firm in his stance, emphasizing the importance of protecting American industries and reducing trade deficits. As the situation develops, businesses, policymakers, and global leaders will closely watch how these trade measures shape the economic landscape in the months ahead.