President Donald Trump is set to introduce new tariffs on major US trade partners this Saturday, targeting Canada, Mexico, and China. The US has informed Canada that starting Tuesday, 25% tariffs will be imposed on most exports, excluding energy products like oil, which will face a 10% tariff, according to a Canadian government source.
Trump has also threatened similar tariffs on Mexican imports, blaming both countries for failing to stop illegal immigration and the flow of fentanyl into the US. On China, he has pledged a 10% tariff, citing the country’s role in the production of synthetic opioids.
These tariffs could have significant effects on supply chains across various sectors, including energy, automobiles, and food. Experts warn that these measures could disrupt business operations and raise costs for consumers, potentially escalating trade tensions further.
Trump, a strong proponent of tariffs, has suggested that Saturday’s move could be just the beginning of more trade conflicts. This week, he also promised tariffs on the European Union, semiconductors, steel, aluminum, and oil and gas products, though the specific countries impacted remain unclear.
The president, who has returned to his Mar-a-Lago estate for the weekend, is facing growing concerns over the economic impact of these tariffs. While some of his supporters downplay the risks, citing potential benefits from tax cuts and deregulation, critics argue that the higher import costs could lead to reduced consumer spending and investment.
EY chief economist Gregory Daco predicts that the tariffs could raise inflation by 0.7% in the first quarter, though he believes this impact will ease over time. The uncertainty surrounding trade policies could also increase financial market volatility, putting additional pressure on the private sector.
Canada and Mexico, key suppliers of US agricultural products and automobiles, could be hit hard by the new tariffs. Canada supplies a significant portion of US oil, and tariffs on crude could have a major impact on energy prices, especially in the US Midwest. S&P Global Mobility estimates that US light vehicle imports from Canada and Mexico will account for 22% of all vehicles sold in the US in 2024, meaning tariffs will likely raise vehicle costs.
Both Canada and Mexico have indicated they are prepared to respond to the tariffs. Canadian Prime Minister Justin Trudeau vowed a “purposeful, forceful” response, while Ontario Premier Doug Ford warned that the tariffs would result in job losses and a slowdown in business. Mexico’s President Claudia Sheinbaum has said the government is ready to react based on what Washington decides.
Despite these concerns, White House Press Secretary Karoline Leavitt downplayed the possibility of a trade war, while experts like David Goldwyn and Joseph Webster of the Atlantic Council warned that the US could face higher energy prices if tariffs are applied to crude oil imports from countries like Canada and Mexico. The US relies heavily on Canadian oil, with nearly 60% of its crude oil imports coming from Canada.
Trump has also suggested a lower tariff rate on oil, acknowledging the potential impact on US refiners, who could face higher costs as a result of these new trade measures.