Trump Orders Steep Tariffs on Goods from Mexico, Canada, China

Reuters

8:11 JST, February 2, 2025

U.S. President Donald Trump on Saturday ordered 25% tariffs on Canadian and Mexican imports and 10% on goods from China starting on Tuesday to address a national emergency over fentanyl and illegal aliens entering the U.S., White House officials said.

Energy products from Canada will have only a 10% duty, but Mexican energy imports will be charged the full 25%, the officials told reporters.

Trump has declared the national emergency under the International Emergency Economic Powers Act to back the tariffs, which allows sweeping powers to address crises.

The White House officials said there would be no exclusions from the tariffs. Moreover, in the case of Canada specifically, they said the “de minimis” U.S. tariff exemption for small shipments under $800 would be canceled.

The moves follow through on a repeated threat Trump has made since shortly after winning last year’s presidential election, and they likely will trigger retaliation and risk igniting a trade war that could cause broad economic disruption for all countries involved.

It was unclear if Trump, who golfed at his Mar-a-Lago estate in Florida on Saturday before signing the order, would speak to the media about the duties.

Trump set the Feb. 1 deadline to press for strong action to halt the flow of the opiate fentanyl and precursor chemicals into the U.S. from China via Mexico and Canada, as well as to stop illegal immigrants crossing U.S. borders.

Less than two weeks into his second term, Trump is upending the norms of how the United States is governed and interacts with its neighbors and wider world.

On Friday, he pledged to proceed with the levies despite acknowledging they could cause disruption and hardship for American households.

A model gauging the economic impact of Trump’s tariff plan from EY Chief Economist Greg Daco suggests it would reduce U.S. growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” at home.

“We have stressed that steep tariff increases against U.S. trading partners could create a stagflationary shock – a negative economic hit combined with an inflationary impulse – while also triggering financial market volatility,” Daco wrote on Saturday.

That volatility was evident on Friday, when the Mexican peso and Canadian dollar both slumped after Trump vowed to fulfill his threats. U.S. stock prices also fell and Treasury bond yields rose.