President Donald Trump has moved forward with plans to charge sweep fees on all goods coming to the US from Canada and Mexico, threatening a trade war with its closest trading partners, and American prices are high with thousands of consumer goods.
The US was scheduled to start collecting 25% tariffs on almost all items from Mexico and Canada from 12:01am on Tuesday, according to the draft general notice of the rules posted Monday. Canadian energy products are collected at a rate of 10%.
Companies ranging from automakers to alcohol producers have warned that the additional costs of companies to import goods from Canada and Mexico will have a wide-ranging impact across the US economy. Some companies are trying to source goods from other countries or move production to the US, but those moves can take years.
In the meantime, businesses say they need to choose between two options after paying the duties. You can either pass the additional costs to the consumer in the form of a higher price, absorb the fees and cut costs elsewhere, or get a lower profit.
Trump also added 10% tariffs on all imports from China on Monday, in addition to the 10% tariffs he placed on Chinese goods last month. This includes products such as electronics, footwear, medicines, cosmetics and more. These tariffs are added to the tariffs already introduced during Trump’s first term.
Trump said he is putting pressure on the country to stop undocumented immigrants and fentanyl from entering the United States through the border. According to the Drug Enforcement Bureau, more than 107,000 people died in 2023 from drug overdose, with nearly 70% of deaths caused by opioids, including fentanyl. Almost all of the 21,900 pounds of fentanyl seized in 2024 are on the southern border, and just 43 pounds of fentanyl were seized at the northern border, according to customs and border protection data.
Late Tuesday, Commerce Secretary Howard Lutnick indicated that relief could be in sight. Appearing in Fox Business News, Lutnick said that a temporary agreement between Canada and Mexico will allow some tariffs to be reverted tomorrow.
“Mexicans and Canadians are calling with me today and trying to show that they’re getting better,” Rutnick said. “And the President is listening, because he’s very fair and very reasonable. So I think he’s going to work something out with them.”
Lutnick continues: “It’s not a pause to pause, but I think he’ll understand that you’re going to do more. And I’ll meet you in some way, and we’ll probably announce it tomorrow.
Retaliation begins before and after
The move risked a tough trade war with Mexico, Canada and China, potentially hurting US companies selling products to those countries, and reversed the USMCA trade agreement between the US, Mexico and Canada, one of Trump’s first term signing transactions.
The agreement, which Trump had promoted at the time as a victory in negotiations, largely allowed the movement of tariff-free items between the three countries, similar to how he had been under the previous North American Free Trade Agreement or the NAFTA for decades. Under the terms of the contract, the contract was not supposed to rise for renegotiation until July 2026, but Trump’s move to impose new tariffs could be at risk for the entire contract.
Mexican President Claudia Sheinbaum said in a statement on Tuesday that her country will respond by Sunday. At a press conference, she said the lawsuit includes “tariffs and non-party measures.” Shainbaum also said Mexico had already taken steps for the past month to crack down on drug gangs and human trafficking flows.
Canada will proceed with its previous plan to impose a 25% tariff on CAD 155 billion ($1007 billion) of American products if US tariffs are effective as planned. Tariffs on $20.7 billion worth of goods, including orange juice, peanut butter, wine and coffee, will take effect immediately, but the remaining $86.3 billion tariffs on US products will begin in 21 days, Canadian Prime Minister Justin Trudeau said in a statement late Monday. They will remain until US trade measures are withdrawn.
“We don’t want this. We want to work as friends and ally with you. You don’t want to see you hurt either, but your government has chosen to do this to you.”
Then, pivoting to talk directly to Trump, Trudeau said: “You’re a very clever person, but this is very stupid.”
He said the country is taking action to further crack down on illegal drug trafficking, despite less than 1% of fentanyl seized by the US crossing the Canadian border. As a result, Trudeau said there was a 97% decrease in fentanyl attacks from January compared to December.
China imposed additional tariffs on US goods on March 10, saying it would include a 15% tariff on chicken, wheat, corn and cotton, and a 10% tariff on sorghum, soybeans, pork, beef, fruits, vegetables, dairy and fish products. China said US tariffs would undermine cooperation between the two largest economies of the world, and hurt American businesses, consumers and international trade.
“Chinese people have never believed in coercion or intimidation, and they don’t succumb to bullying or hegemonic tactics,” China’s Foreign Ministry spokesman Lin Jiang said during a regular briefing in Beijing on Tuesday.
Trump previously threatened to place a 25% tariff on goods from Canada and Mexico on February 1, but he said he has been delaying those tariffs for a month after leaders from both countries said they would strengthen security at the border. On Monday, Trump told reporters that “there are no rooms left in Mexico or Canada,” and negotiated a new import duties.
Economists on the political spectrum warn that tariffs paid by US companies that import goods will increase the amount that consumers pay for a variety of goods, including vehicles, electronics, agricultural products and timber. Stocks fell nearly 2% on Monday, the worst day since December.
“Americans are relying on President Trump to cut costs and expand the US economy. Michael Hanson, senior vice president of spokesperson for the Association of Retail Industry Leaders, puts tariffs in serious danger and risk, putting them at risk of destabilizing the North American economy. “The accumulation of tariffs on household goods also raises the costs of American families. American families are struggling through the worst inflation game in 40 years.”
The specific sector where tariffs are most felt
Automakers are one of the industries that feel the biggest impact from tariffs as they cross multiple times between Canada, the US and Mexico during the production process. Ford CEO Jim Farley warned last month that tariff threats could create disruption in the automotive industry and have devastating consequences for American automakers.
“In the long term, a 25% tariff across the Mexico-Canada border will blow a hole in the US industry that we have never seen,” Farley told an investor meeting last month.
According to a report from Anderson Economic Group, tariffs could add up to $12,000 to the price of a new car. The American Automotive Policy Council, an industry association representing GM, Ford and Stellantis, believes that vehicles and parts that meet the tariff-free requirements under trade agreements previously negotiated during Trump’s first term should be exempt from tariffs.
“American automakers who have invested billions of dollars in the US to meet these requirements should not increase the cost of building US vehicles and undermine their competitiveness in investing intymie investments in the US labor force.
The Aluminum Association, which represents the US aluminum production and employment, said in February it sources two-thirds of the primary aluminum that the US uses every year from Canada, and about 90% of its waste from either Canada or Mexico. It added that US-based smelters, even at full capacity, “cannot produce enough metals to meet demand.”
Tariffs could also contribute to rising grocery prices, as Mexico is one of the top US suppliers of tomatoes, avocados, berries and peppers. The rise in food prices has been the biggest concern for consumers and voters, with grocery costs increasing by around 25% over the past four years. This is an issue that Trump pledged to tackle the trajectory of his campaign.
Tariffs could raise prices of beer and alcohol imported from Mexico and Canada, and could hurt sales of US spirits sold in those countries. The Distillation Spirits Council estimates that a 25% tariff on imports of distillation spirits from Mexico and Canada could potentially lose more than 31,000 US jobs. In 2024, the US imported $5.2 billion worth of tequila and $93 million worth of mezcal and $622 million worth of Canadian spirit from Mexico.
“Taxes on Canadian and Mexican spirit products put industry contributions at stake to the US economy,” the group said in a statement. “The North American spirits sector is very connected, and as a result, tariffs on tequila and Canadian whiskey are harmful to US spirit companies that have these products in their brand portfolio.”
Trump has indicated that more tariffs will be underway. He previously announced on Monday that “mutual” tariffs would come on April 2nd, and reiterated that tariffs on “external products” from the agricultural industry will also be imposed without providing the day.
Last month, Trump imposed a 25% tariff on all steel and aluminum imports from all countries to the United States, raising the 2018 aluminum tariff from 10% to 25% without exceptions or exemptions.
Trump repeatedly cited tariffs as a tool that could be used to raise revenue to pay other domestic spending priorities, and as a measure to pressure businesses to move production to the US.
