New Tariffs on Mexico, Canada; China Tariffs Double

President Donald Trump is preparing to enforce tariffs on both Canada and Mexico, set to begin on Tuesday. This move also includes a doubling of the existing 10% universal tariff on goods imported from China. In a post on Truth Social on Thursday, Trump expressed concern over high levels of illicit drugs, especially fentanyl, being smuggled into the U.S., stating that these tariffs aim to push foreign nations to take a tougher stance on combating drug trafficking.

Trump declared, “We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled.” He also noted that China will face an additional 10% tariff increase on the same date.

The prospect of increasing tariffs has already incited turmoil in the global economy, raising consumer concerns about inflation worsening and the potential impact on the automotive industry if tariffs are imposed on America’s largest trading partners, Canada and Mexico. Historically, Trump has utilized aggressive rhetoric only to back down at the last moment, previously delaying the tariffs meant for Canada and Mexico that were initially scheduled for February.

Trump plans to introduce a 25% tariff on imports from Mexico and Canada, along with a smaller 10% fee on Canadian energy products like oil and electricity. Ostensibly linked to issues of drug trafficking and immigration, this decision spurred reactions from Mexico and Canada, who highlighted their ongoing efforts to address these concerns. Canada named a fentanyl czar, while Mexico dispatched 10,000 National Guard members to its U.S. border.

Mexican President Claudia Sheinbaum expressed a desire to speak with Trump following Cabinet-level discussions in Washington this week. Mexico’s Foreign Affairs Secretary, Juan Ramón de la Fuente, was set to meet with U.S. Secretary of State Marco Rubio on Thursday.

President Sheinbaum remarked that Trump has his unique style of communication but assured that her government would remain composed and hopeful for an agreement to avoid the imposition of tariffs. “I hope we are able to reach an agreement and on March 4 we can announce something else,” she said.

Sheinbaum also noted that Mexican security officials were deliberating on sharing intelligence with U.S. counterparts, which could lead to significant arrests in the U.S. Economically, she emphasized Mexico’s aim to protect the free trade agreement orchestrated during Trump’s first term, affirming the updated North American Free Trade Agreement that includes Canada.

In response to questions about the tariff deadline, François-Philippe Champagne, Canada’s industry minister, said the government was adopting a cautious approach. “One thing we have learned is to take it step by step,” he mentioned, adding that should Trump proceed with the tariffs, Canada is “prepared, and there’ll be a targeted, strategic but firm response.”

Trump implemented a 10% tariff on China for its role in producing chemicals used in fentanyl manufacturing, with plans to double that tariff. China’s Commerce Minister Wang Wentao conveyed to Jamieson Greer, the U.S. trade representative, that trade issues should be settled through discussions and negotiations.

The 25% tariffs on Mexico and Canada could lead to an increased tax burden on U.S. consumers, estimated to be between $120 billion to $225 billion annually, according to trade policy analyst Jacob Jensen from the American Action Forum. The increased tariffs on China might cost consumers up to $25 billion.

Higher prices and slower growth could have political consequences for Trump, who during the previous election, assured voters of his ability to reduce the inflation rate that rose during President Joe Biden’s time in office. Despite this, Trump campaigned on broad tariffs, planning to implement them on April 2 based on matching taxes imposed by other countries on U.S. goods.

“The April Second Reciprocal Tariff date will remain in full force and effect,” Trump declared in his social media statement.

Kevin Hassett, the director of the White House National Economic Council, asserted in an interview with News Nation that the progress shown by Mexico and Canada on fentanyl issues was less than Trump had anticipated. A notable difference in drug smuggling exists between the two countries, with U.S. customs seizing significantly more fentanyl at the Mexican border than at the Canadian border last year.

Hassett highlighted that the reciprocal tariffs would be in addition to those placed on Canada and Mexico. Trump also signaled that European countries would encounter a 25% tariff as part of these reciprocal measures. Additional separate tariffs on cars, computer chips, and pharmaceutical drugs are planned, complementing the reciprocal tariffs..

The president announced an end to exemptions on his 2018 tariffs on steel and aluminum, alongside contemplating taxes on copper imports. The likelihood of expanded trade conflicts, should other countries retaliate with their own tariffs, is increasingly concerning U.S. consumers and might jeopardize Trump’s pledge to boost economic growth.

The Conference Board reported a significant dip of 7 points in its consumer confidence index, dropping to a reading of 98.3. It was the steepest monthly decrease since August 2021, a time when inflationary tensions started to ripple through the U.S. as the country recuperated from the COVID-19 fallout. Inflation expectations over the next 12 months surged from 5.2% to 6% in February, as noted by the Conference Board.

“There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,” highlighted Stephanie Guichard, a senior economist at the Conference Board. “Most notably, comments on the current administration and its policies dominated the responses.”

The S&P 500 stock index has also experienced a decline over the past month, offsetting some gains that followed Trump’s November election win, when investors believed tax cuts and deregulation would stimulate growth.