WASHINGTON – President Donald Trump announced on Friday that he would impose 25% tariffs on imports from Canada and Mexico and 10% tariffs on goods from China beginning Saturday, raising the prospect of sharp price increases for American consumers, despite his suggestion that he would try to mitigate the impact on oil imports.
Trump had threatened tariffs to ensure greater cooperation from countries in combating illegal immigration and the smuggling of chemicals used in fentanyl production, but he has also pledged to use tariffs to boost domestic manufacturing and increase federal government revenue.
“Those tariffs will go into effect tomorrow,” White House Press Secretary Karoline Leavitt told reporters earlier Friday. “These are promises made and promises kept by the president.” Later, speaking to reporters in the Oval Office, Trump stated that the three countries could do nothing to prevent the tariffs from taking effect on Saturday.
The tariffs pose both political and economic risks to Trump, who is only two weeks into his second term. Many voters supported the Republican on the promise of lowering inflation, but tariffs could raise prices and disrupt the energy, auto, lumber, and agricultural sectors.
Trump also came under fire for starting a trade war with the United States’ neighbors and allies, Canada and Mexico, as well as geopolitical rival China. “Rather than attacking our allies, we should focus on going hard against competitors who rig the game, such as China,” said Democratic Senate Leader Chuck Schumer of New York.
“If these tariffs go into full effect, they will raise prices for everything from groceries, to cars, to gas, making it even harder for middle-class families to just get by.”
The 25% tariff that President Donald Trump intends to impose on imports from Canada and Mexico as early as Saturday could raise the cost of everything from gasoline and pickup trucks to Super Bowl party guacamole dip.
Trump had indicated that he was considering issuing an exemption for Canadian and Mexican oil imports. He stated on Friday that he was considering lowering the oil tariff rate, but it is unclear whether that lower rate will be in effect when he signs the order on Saturday.
Trump stated that he plans to reduce oil tariffs. “We think we are going to bring it down to 10%.”
In October, the United States imported nearly 4.6 million barrels of oil per day from Canada and 563,000 barrels from Mexico, according to the Energy Information Administration. During that month, the United States produced nearly 13.5 million barrels per day on average.
Trump has previously stated that a 10% tariff on Chinese imports would be added to other import taxes imposed on the country’s products.
The president also stated that additional tariffs would be imposed, but he provided few specifics. “We will impose tariffs on computer chips, as well as oil and gas. That will happen fairly soon, probably around the 17th of February,” Trump said, promising tariffs on copper and the European Union.
Shortly after Leavitt spoke, the S&P 500 stock index sold off, wiping out most of its gains for the day.
“We should expect all three countries to retaliate,” said Wendy Cutler, a former United States trade negotiator. China responded aggressively to Trump’s tariffs on Chinese goods during his first term, levying retaliatory taxes on US farm exports aimed at the president’s rural supporters.
Kurt Tong, former US consul general in Hong Kong and Macau and now managing partner at The Asia Group, expressed surprise at the new tariffs on China. Trump had made “a real effort” to establish communication channels with Chinese President Xi Jinping, according to Tong, and imposing tariffs on Chinese products “at this very early stage” would make it difficult to reach a negotiating agreement. He predicts “measurable and significant” retaliation from Beijing.
Both Canada and Mexico have stated that they are prepared to use retaliatory tariffs if necessary, which could lead to a larger trade conflict that, according to economic analysts, could harm growth and accelerate inflation.
Canadian Prime Minister Justin Trudeau said Friday that Canada is prepared to respond if Trump imposes tariffs, but he did not provide details.
“We are ready with a response, a purposeful, forceful but reasonable, immediate response,” he told me. “It is not what we want, but if he moves forward, we will also act.”
Trudeau said tariffs would have “disastrous consequences” for the United States, putting jobs at risk and raising prices. Trudeau reiterated that Canada accounts for less than 1% of all fentanyl and illegal border crossings into the United States.
Mexican President Claudia Sheinbaum said Friday that Mexico has been in contact with Trump’s team since before he returned to the White House, but she emphasized that Mexico has a “Plan A, Plan B, and Plan C for whatever the United States government decides.”
“Now it is very important that the Mexican people know that we are always going to defend the dignity of our people, we are always going to defend the respect of our sovereignty and a dialogue between equals, as we have always said, without subordination,” Sheinbaum told the crowd.
Liu Pengyu, spokesman for the Chinese embassy in Washington, stated that the two countries should resolve their differences through dialogue and consultation.
“There is no winner in a trade war or tariff war, which serves the interests of neither side nor the world,” Liu told reporters. “Despite our differences, our two countries have enormous common interests and opportunities for cooperation.”
This month, Warwick McKibbin and Marcus Noland of the Peterson Institute for International Economics concluded that the 25% tariffs on Canada and Mexico and 10% tariffs on China “would damage all the economies involved, including the United States.”
“For Mexico,” the study stated, “a 25% tariff would be disastrous. Furthermore, the tariff’s economic impact may increase the incentives for Mexican immigrants to illegally cross the border into the United States, directly contradicting another Trump administration priority.
Cutler, who is now vice president of the Asia Society Policy Institute, stated that the extent of the economic damage will be determined by how long the tariffs remain in effect.
If it is only a few days, “that is one thing.” If they remain in place for weeks or months, we will see supply chain disruptions, higher costs for US manufacturers, and higher prices for US consumers,” she stated. “It could have macroeconomic implications.
It could have an impact on the stock market. Then, on a global scale, it could exacerbate tensions with our trading partners, making it more difficult for us to collaborate.
