President Donald Trump announced that tariffs on imports from Canada and Mexico would begin next month, effectively ending a temporary suspension on these import taxes. This move, which might inhibit economic growth and increase inflation, was confirmed during a White House news conference with French President Emmanuel Macron.
When asked about the tariffs on the United States’ two largest trading partners, Trump emphasized that his planned “reciprocal” tariffs remain on schedule to start by April. “The tariffs are going forward on time, on schedule,” Trump confirmed. The president has maintained that other countries impose unfair import taxes affecting domestic manufacturing and employment. His frequent tariff threats have sparked concerns among consumers and businesses about a slowing economy and rising inflation rates. Nevertheless, Trump argues that these tariffs could help reduce the federal budget deficit and create new jobs. “Our country will be extremely liquid and rich again,” he stated.
In an interview with Fox News, Macron expressed hope that he had persuaded Trump to avoid a trade war, highlighting the challenge of targeting an ally, such as Europe, while applying tariffs against China’s industrial dominance. “We don’t need a trade war,” Macron emphasized. “We need more prosperity together.”
Most economists believe the costs of these import taxes would primarily fall on consumers, retailers, and manufacturers, such as automotive companies that depend on global sourcing and raw materials like steel and aluminum, which Trump had already targeted with separate 25% tariffs.
On the other hand, Mexican President Claudia Sheinbaum remained optimistic, predicting her government could secure an agreement with the U.S. before Trump’s deadline. “We would need to be reaching important agreements this Friday,” Sheinbaum mentioned. She indicated the ongoing communication and commitment from both sides to finalize the agreement. Additionally, Sheinbaum suggested Mexico’s readiness to address not only drug production but also drug consumption within the U.S. if necessary.
Walmart and other companies have expressed concerns about existing uncertainties, and the University of Michigan’s latest consumer sentiment index noted a decrease of approximately 10% over fears of worsening tariffs and inflation. In the 2024 presidential election, voters trusted Trump to quell inflation after its spike during President Joe Biden’s tenure. However, Trump persisted with the tariff threats, despite Macron’s previous assertions that the trade discussions had yielded some common ground.
Macron emphasized his commitment to fair trade, aiming for smoother trade and investment rather than a confrontational approach. Future talks are expected to elaborate on these points. Despite ongoing discussions with Canadian and Mexican representatives, Trump indicated plans to end the month’s suspension of tariffs set to commence initially in February. Imports from Canada and Mexico will be taxed at 25%, with specific Canadian energy products facing a 10% tariff.
These tariffs aim to pressure Canada and Mexico to enhance their measures against illegal immigration and drug trafficking. While Canada addresses the minor issue of fentanyl, it has taken steps to satisfy U.S. concerns. Mexico has bolstered its border security with 10,000 National Guard troops.
New tariffs are expected to match rates imposed by other countries and might even exceed them by considering various economic factors. Starting in April, these new tariffs could contribute to increased trade conflict, with Canada, Mexico, and Europe potentially imposing retaliatory tariffs. According to the Yale University Budget Lab, this could reduce average U.S. incomes by $1,170 to $1,245 annually.
