The White House said Friday that President Donald Trump would impose a 25% tariff on goods coming to the U.S. from Canada and Mexico and a 10% tariff on those from China on Saturday, a move that could drive up prices for products coming into the U.S. from those countries.
Trump had previously said he would issue those tariffs on the first day of his presidency then said on Inauguration Day that the tariffs would be put in place on Feb. 1. White House press secretary Karoline Leavitt told reporters on Friday that Trump would carry through on that Feb. 1 deadline.
Leavitt said the tariffs were being put in place in response to “the illegal fentanyl that they have sourced and allowed to distribute into our country which has killed tens of millions of Americans.”
The tariffs could increase how much U.S. consumers and businesses pay for goods coming from Canada, Mexico and China — including electronics, toys, shoes, fresh produce, lumber and cars. Tariffs are paid by companies importing goods into the U.S., similar to a tax.
While some businesses will look to source goods elsewhere, others with no alternatives will be forced to pay the fees. Companies will have to decide whether to pass these higher costs to consumers or absorb them, which would dent profits or require cuts to protect their margins. The implications could be wide-reaching across the U.S. economy, in part because American consumers and businesses imported more goods from Mexico than any other country.
When asked about the impact tariffs will have on inflation, Leavitt cited relatively low inflation during Trump’s first term when he placed tariffs on billions of Chinese goods.
“President Trump is going to do everything he possibly can to cut the inflation crisis that the previous administration imposed on the American people, and he will continue to effectively utilize tariffs,” Leavitt said.
Tariffs during Trump’s first term were more limited in scope than the current proposal and included a long list of exemptions and delays for certain products and industries. Economists have found those tariffs drove up prices for some imports, led to a net loss of manufacturing jobs and reduced corporate investments as a result of higher costs companies had to pay to import materials and parts.
Mexico and Canada have threatened to retaliate with their own tariffs on U.S. imports, which could hurt American businesses that sell to those countries, like oil producers, farmers and manufacturers.
“If the President does choose to implement any tariffs against Canada, we’re ready with a response. A purposeful, forceful, but reasonable immediate response,” Canadian Prime Minister Justin Trudeau said Friday. “We won’t relent until tariffs are removed and, of course, everything is on the table.”
During Trump’s first term, China placed retaliatory tariffs on U.S. agriculture products, and nearly all the revenue collected by the U.S. from the tariffs on China went to payments to American farmers to offset their losses from those Chinese tariffs.
The U.S. auto industry is among the most vulnerable to the tariffs on Mexico and Canada. For decades, its supply chains have been heavily intertwined with America’s neighbors to the north and south. As vehicles and components cross borders multiple times during the production process, repeated 25% levies could quickly drive up vehicle costs.
The U.S. also depends on agricultural products from Mexico, one of the top suppliers of tomatoes, avocados, berries and peppers. Rising food prices have been a top concern for consumers and voters, with grocery costs up around 25% over the past four years — an issue Trump hammered on the campaign trail.
The tariffs on Canada could also drive up prices of oil imported from Canada and Canadian lumber, which could drive up the cost of new homes and other construction projects.
