US President Donald Trump announced plans to impose tariffs starting Saturday, targeting 25% on Mexico, 25% on Canada, and 10% on China, according to the White House. However, Trump indicated on Friday that Canadian oil would face a reduced tariff of 10%, set to take effect on February 18.
Trump’s decision to impose these tariffs is primarily framed as a response to illegal fentanyl trafficking from Canada and Mexico, which has contributed to the deaths of millions of Americans. The White House press secretary, Karoline Leavitt, emphasized that these measures were in line with promises made by the President during his campaign.
In addition to these tariffs, Trump mentioned plans to target the European Union with tariffs in the future, accusing the EU of unfair trade practices toward the US.
The move comes as Trump seeks to address what he considers trade imbalances and the influx of undocumented migrants from the southern border. While the tariffs on China were initially considered as high as 60% during Trump’s campaign, he refrained from immediate action upon his return to the White House, opting instead to study the issue further.
China, Canada, and Mexico are the US’s top trading partners, collectively accounting for 40% of the goods imported into the country. Economists worry that the new tariffs could escalate tensions, potentially sparking a global trade war and driving up consumer prices in the US.
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Canadian Prime Minister Justin Trudeau responded by stating that while Canada does not want a trade dispute, it will take action if Trump proceeds with the tariffs. Both Canada and Mexico have already indicated that they would retaliate with their own tariffs, while also working to address US border security concerns.
The imposition of tariffs on imported oil from Canada and Mexico could further strain Trump’s promise to reduce the cost of living for Americans. Tariffs on goods produced abroad are designed to make imports more expensive, encouraging consumers to buy local products. However, the added cost on energy could lead to higher prices for gas, goods, and services, as businesses pass these costs onto consumers.
Around 40% of the crude oil used in US refineries is imported, with the majority coming from Canada. The potential for rising fuel prices could undermine Trump’s goal of lowering living costs for Americans.
Mark Carney, former head of the Bank of Canada and the Bank of England, warned that these tariffs could harm US economic growth and increase inflation. He also cautioned that they could damage the US’s international reputation.
