President Donald Trump is digging in his heels on tariffs — imposing sweeping duties on goods from Mexico, Canada and China on Saturday.
The tariffs will likely raise the price of everything from Super Bowl avocados to gasoline and cars, from maple syrup to iPhones, experts warned.
The backlash was instantaneous Mexico and Canada — who import more American goods than any other country — quickly responded with retaliatory tariffs of their own.
Canadians, in particularly, seemed to be taking the news personally — giving a Bronx cheer to the “Star Spangled Banner” ahead of NHL games across the country Saturday night, and again at a Toronto Raptors home game on Sunday.
Trump isn’t backing down.
“This will be the golden age of America! Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will all be worth the price that must be paid,” Trump, 78, wrote on Truth Social Sunday in all caps.
Citing a national emergency over their failure to curb the flow of deadly drugs and illegal immigrants into the US, Trump declared a 25% tariff would be imposed on imports from Canada and Mexico, along with a 10% tariff on imports from China.
“We have big deficits, as you know, with all three of them. And in one case they’re sending massive amounts of fentanyl, killing hundreds of thousands of people a year, with the fentanyl. And in the other two cases, they’re making it possible for this poison to get in,” Trump said in the Oval Office.
“The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency,” a White House statement said of Trump invoking the International Emergency Economic Powers Act (IEEPA), which empowered him to enact the tariffs.
The statement said Trump’s “bold action” in imposing the trade levies — dismissed by many during the presidential race as campaign bluster — was intended to hold the nations accountable.
But, he also suggested they were an attempt to level the playing field against three nations with which the US had a combined $450 billion trade deficit in 2023.
Trump’s rationales for the tariffs
Much of the official White House statement justifying the tariffs positions illegal immigration and the opioid crisis as the prime drivers of the move.
“Last fiscal year, Customs and Border Protection (CBP) apprehended more than 21,000 pounds of fentanyl at our borders, enough fentanyl to kill more than 4 billion people,” the administration wrote, noting that federal officials are only able to seize “a fraction” of the deadly drug smuggled across the border.
Trump blamed Mexico and Canada for being lax in their enforcement in letting fentanyl into the US, but also pointed a finger at China for failing to cut off the spigot of precursor chemicals used to manufacture the deadly drugs — and keep them from getting into the hands of cartels.
The tariffs are also meant to boost US coffers by addressing inherent imbalances in trade between the nations, which Trump says consistently give the US the short end of the stick.
“The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the ‘Stupid Country’ any longer,” Trump proclaimed.
The White House made clear that the Trump administration believes America’s biggest trading partners have a lot more to lose in a trade war than the US does.
“Access to the American market is a privilege,” the White House said.
“While trade accounts for 67% of Canada’s GDP, 73% of Mexico’s GDP, and 37% of China’s GDP, it accounts for only 24% of U.S. GDP. However, in 2023 the U.S. trade deficit in goods was the world’s largest at over $1 trillion.”
It’ll hurt you more than it’ll hurt us
Additionally — the trading relationship matters a lot more to Mexico, Canada and China’s economies than it does to the US.
The goods Mexico sells to the US make up 24% of the Mexican economy. For Canada, exports to the US are worth 18% of the economy. US exports to the Mexico and Canada are worth just 1% each to the American economy.
Roughly 75% of Canada’s exports go to the US while only about 13% of American exports go to Canada. Meanwhile, about 80% of Mexican exports flow to the US, while 16% of US exports go to them.
Trump has said Sunday that the US is “subsidizing” Canada by importing its goods rather than producing them domestically. He claimed that America’s northern neighbor would “[cease] to exist as a viable country” if the subsidy dried up.
He also repeated his idea — in more concrete terms — that all these problems would go away if Canada was simply made the 51st state.
“Make your product in the USA and there are no tariffs!” he added in all caps. “Why should the United States lose trillions of dollars in subsidizing other countries, and why should these other countries pay a small fraction of the cost of what USA citizens pay for drugs and pharmaceuticals, as an example?” the president said on Truth Social.
The tranche of new levies also includes an additional 10% tax on Canadian energy exports.
“We don’t need anything they have. We have unlimited Energy, should make our own Cars, and have more Lumber than we can ever use,” he said.
The tariffs will also do away with the so-called “de minimis” exemption for packages worth less than $800, which has allowed Chinese retailers like Alibaba, Temu and Shein to save hundreds of millions per year by shipping cheap clothes and gadgets directly to US consumers.
Canada and Mexico fight back
Trump saw big success in rattling the tariffs saber at Colombian president Gustavo Petro last week over his refusal to allow planes loaded with deported migrants to enter the country. After slapping the South American country with a 25% tariff, Petro quickly buckled, and even offered up the presidential plane to shuttle migrants back home.
However, Canada, Mexico and China are so far not giving up without a fight.
Canada and Mexico almost immediately hit US goods with a 25% counter-tarrifs. China, meanwhile, has announced plans to take the matter to the World Trade Organization over the new 10% Trump tariff.
Trade between the US and those three countries is about $1.4 trillion annually, making up over 40% of US total imports.
Bloomberg Economics reported choppy economic seas could be ahead, estimating the budding trade war could raise the current average US tariff rate from just under 3% to a whopping 10.7%. They also warned US GDP could sink 1.2% while threatening to lift inflation by 0.7%.
Trump’s tariffs will likely see US consumers see higher prices on goods like fruit, meat, gasoline, cars and electronics as retailers look to pass the increased costs along to customers.
The Tax Foundation has estimated that Trump’s tariffs will reduce GDP by about 0.4 percentage point and raise unemployment by about 344,000 jobs.
In the short term, the Tax Foundation is expecting the average US household would be paying $830 more in taxes to the federal government via tariffs on goods they buy.
