Trump Ends 25% Tariff Pause on Canada, Mexico; Adds Extra 10% on China

What Happened?

President Donald Trump announced Thursday that 25% tariffs on Canadian and Mexican goods are set to take effect on March 4.

An additional 10% on Chinese imports was also threatened after Trump claimed illicit drugs are still pouring into the U.S., 'at very high and unacceptable levels.'

'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,' Trump said on Truth Social.

He added that the previously imposed reciprocal tariffs on all major U.S. trading partners, including allies, are set to remain in full force and effect beginning April 2.

Mexico and Canada previously pledged to boost their border security efforts which prompted a one-month pause on the 25% tariff measures.

The countries agreed to cooperate with various requested measures such as immediately reinforcing their borders with 10,000 frontline members.

Canada also agreed to work on protecting the border through a 'Canada-U.S. Strike Force' and appoint a 'Fentanyl Czar.'

The anticipated tariff revenues would help balance the expected $1.9 trillion budget deficit.

Why it Matters

Trump has viewed measures such as reciprocal tariffs as 'fair' by eliminating any trade imbalances despite the possibility of triggering an economic trade war.

China previously announced a series of retaliatory tariffs on the U.S. that took effect on Feb. 10.

According to reports, China, Mexico, and Canada are America's top three trade partners.

Together, all three accounted for more than 40% of U.S. imports last year.

Mexico and Canadian leaders had previously said they would impose retaliatory tariffs on the U.S. if the White House proceeded with its proposal.

Both countries have officials reportedly in Washington this week to hold discussions to try and get ahead of the pending measure.

The current U.S.–Mexico–Canada Trade Agreement (USMCA) is up for review on July 1, 2026.

A 25% flat tariff raise on steel and aluminum imports 'without exceptions or exemptions' is set to take effect March 12.

Experts have reportedly warned these actions will largely be passed on to U.S. prices.

Instead, Trump has stood by the sentiments that 'the United States has been ripped off by virtually every country in the world.'

'America has helped many countries throughout the years, at great financial cost. It is now time that these countries remember this and treat us fairly,' Trump stated previously on Truth Social.

The White House still aims to review its existing trade agreements to evaluate its current trade leverage worldwide.

How it Affects You

The potential trading relationships with two of the nation's biggest allies now hang in the balance.

A trade war with Canada would likely cause a 'shallow' recession in the U.S., reports have said.

Researchers have also cited that 25% tariffs on Mexico and Canada could result in a tax hike of more than $1,200 per year on American households.

Reciprocal tariffs would likely increase that amount.

There is a long road ahead to see how consumer prices will be impacted and what effects this may have on easing inflation.