Washington (AP) — President Donald Trump announced on Friday that he will impose 25% tariffs on imports from Canada and Mexico and 10% tariffs on goods from China beginning Saturday, creating the prospect of sharp price hikes 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 stimulate home 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 concerns to Trump, who is only two weeks into his second term. Many voters supported the Republican on the promise of lowering inflation, but tariffs might raise costs and destabilize the energy, car, timber, and agricultural sectors.
Trump also came under fire for initiating a trade war with the United States’ neighbors and allies, Canada and Mexico, as well as geopolitical foe 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 may raise the cost of everything from gasoline and pickup trucks to Super Bowl party guacamole dip.
Trump had indicated that he was considering giving an exemption for Canadian and Mexican oil imports. He stated on Friday that he was considering lowering the oil tariff rate, but it is uncertain whether the lower rate will be in effect when he issues the order on Saturday.
Trump stated that he plans to lower oil tariffs. “We think we’re going to bring it down to 10%.”
In October, the United States imported over 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 roughly 13.5 million barrels per day on average.
Trump has previously suggested that a 10% tariff on Chinese goods will be added to other import charges imposed on the country’s exports.
The president also stated that additional tariffs would be imposed, although he provided few specifics. “We will impose taxes on computer chips, as well as oil and gas. That will happen fairly soon, perhaps around the 17th of February,” Trump stated, vowing taxes on copper and the European Union.
Shortly after Leavitt spoke, the S&P 500 stock index dropped down, 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 fiercely to Trump’s tariffs on Chinese goods during his first term, levying retaliatory charges on US farm exports aimed at the president’s rural voters.
Kurt Tong, former US consul general in Hong Kong and Macau and currently managing partner at The Asia Group, expressed surprise at the additional tariffs on China. Trump has made “a real effort” to develop communication lines with Chinese President Xi Jinping, according to Tong, and placing tariffs on Chinese imports “at this very early stage” would make it harder to reach a negotiated agreement. He predicts “measurable and significant” reaction from Beijing.
Both Canada and Mexico have stated that they are prepared to deploy retaliatory tariffs if required, which may lead to a larger trade dispute that, according to economic analysts, might harm economy and exacerbate inflation.
Canadian Prime Minister Justin Trudeau warned Friday that Canada is prepared to respond if Trump imposes tariffs, but he did not provide details.
“We’re ready with a response, a purposeful, forceful but reasonable, immediate response,” he told me. “It’s not what we want, but if he moves forward, we will also act.”
Trudeau said tariffs will have “disastrous consequences” for the United States, putting jobs at risk and raising costs. Trudeau underlined that Canada accounts for fewer than 1% of all fentanyl and unlawful border crossings into the United States.
Mexican President Claudia Sheinbaum said Friday that Mexico has been in contact with Trump’s staff since before he returned to the White House, but she highlighted 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 address their concerns through discussion 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 found 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 research stated, “a 25% tariff would be disastrous. Furthermore, the tariff’s economic impact may enhance the incentives for Mexican immigrants to illegally cross the border into the United States, thus contradicting another Trump administration aim.
Cutler, who is currently vice president of the Asia Society Policy Institute, stated that the magnitude of the economic harm will be determined by how long the tariffs remain in effect.
If it’s only a few days, “that’s one thing.” If they remain in place for weeks or months, we will witness supply chain disruptions, greater expenses for US firms, 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.
