Trump’s sweeping tariffs on Canada and Mexico end decades of North American free trade
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- President Trump imposes a 25% import tax on all products from Mexico and Canada, with the exception of Canadian oil and gas.
- Canadian Prime Minister Justin Trudeau said the United States had launched a “trade war.”
- “There is no motive, reason or justification that supports this decision that will affect our people and our nations,” said Mexican President Claudia Sheinbaum.
MEXICO CITY — Sweeping tariffs imposed Tuesday by President Trump are sending shock waves through global supply chains, roiling markets and shaking the very foundations of the more than three-decade free trade regimen that made Mexico, Canada and the United States a unified commercial colossus.
Beginning with the North American Free Trade Agreement in 1994, the three-nation bloc embraced the principle that duty-free commerce was a winning strategy and a hedge against competition from Asia, Europe and elsewhere — an assumption that now seems very much under threat.
As of Tuesday, Washington began levying a 25% tax on all products imported from Mexico and Canada, with the exception of Canadian oil and gas, which is subject to a 10% tariff. Trump also imposed a new 10% tax on imports from China.
Canada and China swiftly announced retaliatory taxes on U.S. goods, and Mexico said it would soon announce its own counter-tariffs.
Today the United States launched a trade war against Canada, their closest partner and ally, their closest friend
— Canadian Prime Minister Justin Trudeau
Canadian Prime Minister Justin Trudeau, describing a plan to start taxing more than $100 billion of American goods over the course of three weeks, said Trump’s economic attack on Canada and Mexico was a troubling realignment of foreign policy.
“Today the United States launched a trade war against Canada, their closest partner and ally, their closest friend,” Trudeau said at a news conference. “At the same, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense.”
Trump, who has repeatedly spoken of Canada becoming the 51st U.S. state, replied in a social media post: “Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!”
To justify his tariffs, Trump has cited the trafficking of fentanyl, but he has also named illegal immigration and a desire to lure manufacturing back to the U.S.
U.S. stock fell over fears that the tariffs would trigger a wider trade war — precisely what NAFTA and its successor, the United States-Mexico-Canada Agreement, signed during the first Trump administration, were meant to avert.
“It’s the very idea of free trade in North America that has been thrown out the window,” said Juan Carlos Moreno-Brid, an economist at the National Autonomous University of Mexico. A relationship based on cooperation instead of competition, he said, “has been invalidated.”
Supply chains built up over decades — manufacturing a wide array of products including automobiles, computers and TVs, many produced with components that cross borders many times — are being thrown into disarray.
“We’re heading full bore into the buzz saw,” said Jerry Pacheco, director of the Border Industrial Assn., a trade group based in Santa Teresa, N.M., who added that the mere threat of tariffs had already had a chilling effect on cross-border business. “I’d hate to be a supply chain manager right now,” he said. “I don’t think the Trump administration understands how integrated we are.”
However, others say that Trump — who casts himself as the consummate deal-maker — isn’t likely to scrap entirely the notion that North America is stronger economically if its nations work together, and is well aware of the higher prices for U.S. consumers that could result from a trade war.
“This is a stumbling block, especially for Mexico,” Jorge Castañeda, a former foreign secretary of Mexico, said of the tariffs. “But I think the basic thrust of North American integration will continue.”
The ex-diplomat compared the predicament faced by Mexican President Claudia Sheinbaum with Trump’s tariff pledges to that of Ukrainian President Volodymyr Zelensky — who was told by Trump last week that he has doesn’t have “the cards” to play in trying to end its war against Russia.
“Mexico also has few chips to play,” Castañeda said.
While Mexico has already gone out of its way to placate Trump, Castañeda said, Washington is likely to demand more — possibly additional Mexican troops stationed permanently along the northern border, U.S. inspectors posted at Mexican seaports to help stop trafficking of precursor chemicals used in production of fentanyl, and a reduction in the growing Chinese investment in Mexico.
Sheinbaum “has no choice” but to do what Trump demands, Castañeda said.
Three decades ago, Mexico jettisoned its historically protectionist policies to embrace free trade and become largely export-dependent. The United States is now the destination of more than 80% of Mexico’s exports, with a quarter of its economy depending directly on trade with the United States.
But there were always skeptics who argued that Mexico should not put too many of its eggs in the U.S. basket, and should instead seek to broaden its trading horizons. Today, those warnings seem prescient.
Analysts said the tariffs, if prolonged, could send Mexico’s already shaky economy into recession.
“The tariffs come at the worst possible time,” said Rodrigo Aguilera, an independent economist who has warned that if work becomes scarce in Mexico, more people without proper documentation will seek to enter the U.S.
Trump’s measures threaten to upend the global economy and were expected to drive up prices for U.S. consumers, with some effects being felt almost immediately.
President Trump has turned Canada into a punching bag. In response, a Canadian boycott on U.S. goods is gaining ground.
President Sheinbaum said Tuesday that Mexico will also retaliate — but said her government will hold off on revealing which products Mexico plans to target until a public event Sunday in Mexico City’s central plaza. Her response suggested that Mexico still seeks to avert a full-blown trade war. Sheinbaum said she hopes to speak with Trump in coming days.
“There is no motive, reason or justification that supports this decision that will affect our people and our nations,” she said at her daily news conference.
She also highlighted all that Mexico has done on immigration — helping to bring illegal border crossings to the lowest levels in years — and drug trafficking. Mexico has increased seizures of fentanyl, the synthetic opioid that has caused tens of thousands of U.S. deaths.
Last week, Mexico handed over to the United States 29 drug trafficking suspects, including Rafael Caro Quintero, the alleged mastermind of the 1985 slaying of Enrique Camarena, an undercover U.S. Drug Enforcement Administration agent in Mexico.
Few countries would be more affected than Mexico by Trump’s threats to enact sweeping tariffs on imports. They could lead to more poverty, migration, some economists say.
Mexico, Canada and China are the top trading partners of the United States, accounting for more than 40% of all U.S. imports. They supply the U.S. with food, medicine, cars, timber and electronics.
Experts say American consumers may find higher prices for fresh vegetables, fruits and other perishable imports in a matter of days.
For other products, prices may start to increase only as inventories are depleted. Car prices will almost surely go up. U.S. auto manufacturing is deeply intertwined with Mexico and Canada, with parts crossing the border many times. Now, those parts will be taxed 25% every time they enter the U.S.
Although it’s set in Mexico City, French film ‘Emilia Pérez’ ran into a frost reception on its opening there. Critics cited stereotypes and the lack of a clear message about the narcos it portrays.
Gas prices are also likely to rise, particularly in the Great Lakes and Rocky Mountain West, which depend on Canadian oil.
The new 10% tariffs on China add to duties that Trump imposed on Chinese imports last month, and during his first term. They are expected to hit American households because China is a big supplier of a broad range of consumer items.
Trump has acknowledged that the new tariffs could cause pain for consumers, but he has argued that they are worth it to draw manufacturing back to the U.S. and rebalance trade with the impacted countries, each of which sell more goods to the U.S. than it buys.
“Come make your product in America,” he told companies in a speech via video at the World Economic Forum this year. If not, he said, “then very simply you will have to pay a tariff.”
The tariffs upend the United States-Mexico-Canada Agreement, which Trump himself negotiated and which, in 2020, he praised as “the fairest, most balanced and beneficial trade agreement we have ever signed into law.”
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