Trump Signs Tariff Order, Canada and Mexico Announce Retaliatory Measures

U.S. President Donald Trump has signed an executive order imposing a 25% tariff on all goods imported from Canada and Mexico, with the exception of Canadian energy products, which will be subject to a 10% duty. The tariffs on Canadian imports are set to take effect on Tuesday. Additionally, the executive order enforces a 10% tariff on goods imported from China.

Citing a "major threat" from illegal immigration and drug trafficking, the White House stated that these measures are intended to hold Canada, Mexico, and China accountable for their commitments to curb illegal immigration and the flow of illicit substances, including fentanyl, into the United States. The administration invoked the International Emergency Economic Powers Act to justify the tariffs, emphasizing their role as a strategic tool for national security and economic leverage.

In response, Canadian Prime Minister Justin Trudeau announced retaliatory tariffs on U.S. imports amounting to 25% on goods valued at CAD 155 billion. He specified that CAD 30 billion worth of these tariffs would take effect immediately, with the remainder being implemented over the next 21 days. Trudeau emphasized that Canada had no desire for an economic confrontation but was prepared to act decisively. He stated that discussions with provincial premiers, the Cabinet, and Mexican President Claudia Sheinbaum were ongoing.

Similarly, Mexican President Claudia Sheinbaum directed her economy minister to implement "Plan B," which includes tariff and non-tariff measures aimed at safeguarding Mexico’s economic interests. She also refuted allegations made by the White House regarding alleged ties between her government and criminal organizations, labeling them as baseless slander.

The tariffs are expected to have significant implications for global supply chains, as Canada and Mexico are two of the United States' largest trading partners. In 2023, Canada and Mexico collectively exported over $1.01 trillion worth of goods to the U.S., while purchasing U.S. goods and services worth $808 billion. Trade between the three nations is deeply integrated, particularly in sectors such as agriculture, where Mexico supplies over 80% of U.S. avocado imports.

The imposition of tariffs on Canadian and Mexican oil and energy products has also raised concerns within the industry. The American Fuel and Petrochemical Manufacturers Association (AFPM), which represents major corporations including Chevron Corporation, ExxonMobil, Koch Industries, Marathon Petroleum, and Valero Energy, expressed hope that the tariffs would be lifted before causing significant economic disruptions. The Canadian Chamber of Commerce also voiced strong opposition, describing the decision as "profoundly disturbing" with immediate consequences for businesses and workers in both countries.

Meanwhile, Trump has indicated his intent to impose tariffs on additional sectors, including semiconductors, steel, aluminum, and oil and gas. He also signaled possible future trade measures targeting the European Union.

As tensions escalate, the economic impact of these policies remains uncertain, with analysts warning of potential price increases on essential commodities and disruptions to North American trade flows.