On Feb. 1, President Donald Trump signed an executive order imposing hefty tariffs on imports from Mexico, Canada and China, sparking immediate backlash and feelings of betrayal from America’s North American neighbors. The move marked the beginning of a trade war between long-standing allies.
Trump defended the tariffs on social media, claiming they were necessary to protect Americans. He demanded the three countries take stronger action against the production and export of illicit fentanyl, and for Canada and Mexico to curb illegal immigration into the U.S.
If these tariffs remain in place, they could significantly worsen inflation, jeopardizing the trust of voters who relied on Trump to lower the costs of essential goods like groceries, gasoline, housing and cars. The tariffs also risk destabilizing the global economy and challenging Trump’s political standing only two weeks into his second term.
The order declared an economic emergency, imposing 10% duties on all Chinese imports and 25% on goods from Mexico and Canada. Canadian energy imports, including oil, gas, and electricity, would also face a 10% tariff. The order allows the U.S. to escalate tariffs in response to retaliation from other countries, raising the threat of a deeper economic disruption.
Canadian Prime Minister Justin Trudeau expressed disappointment, condemning the tariffs for dividing rather than uniting the nations. He announced that Canada would retaliate with 25% tariffs on up to $155 billion worth of U.S. goods, including alcohol and fruit. Trudeau reminded Americans of Canada’s historical support, noting that Canadian troops fought alongside U.S. forces in Afghanistan and responded to various crises in the U.S.
Mexico’s President Claudia Sheinbaum also ordered retaliatory tariffs, vehemently rejecting Trump’s accusations that the Mexican government was allied with criminal organizations. She stated that Mexico would take action to defend its interests, calling out the U.S. for not doing enough to combat fentanyl consumption at home.
China condemned the tariffs, with the Ministry of Foreign Affairs announcing its opposition and warning that countermeasures would be taken to protect China’s interests. The country, which has regulated fentanyl-related substances since 2019, called on the U.S. to correct its actions.
The tariffs will take effect on Tuesday, and a Yale Budget Lab analysis predicted significant economic damage, with U.S. households losing an estimated $1,170 in income from the new taxes. The tariffs could slow economic growth and worsen inflation, with the risk of further retaliation from other nations.
A senior U.S. administration official acknowledged the lower tariffs on energy to minimize disruptions to gasoline and utility prices but noted that the White House was prepared for inflationary risks. The order lacked any exceptions, which could affect industries reliant on Canadian imports, including homebuilders, farmers and automakers.
The official didn’t provide specific criteria for lifting the tariffs, only stating that fewer American deaths from fentanyl would be a key measure.
Critics questioned the logic of imposing tariffs on raw materials, which traditionally have lower taxes to maintain competitive manufacturing. William Reinsch, a former trade official, criticized the economic rationale behind the move.
With this order, Trump reaffirmed his commitment to tariffs, which are central to his economic and national security policies. Allies had downplayed the threat of higher import taxes, but Trump’s actions signaled that tariffs would remain a key part of his second-term agenda. He has already hinted at more tariffs targeting imports like computer chips, steel, oil, gas, copper, pharmaceuticals and even goods from the European Union.
Trudeau cautioned that the tariffs would bring economic pain and urged Canadians to support domestic products. Despite the tension, he expressed hope that the strong relationship between the U.S. and Canada would endure.
“This is going to have real consequences for people on both sides of our border. We didn’t ask for this, but we will not back down in standing up for Canadians and the incredibly successful relationship between our nations,” Trudeau said.
On Feb. 3, Trump announced he had reached a deal with President Sheinbaum, delaying tariffs toward Mexico for at least a month. The tariffs on Canada and China remain in place and will be active as of Feb. 4.
