Trump Implements Sweeping Tariffs as China and Canada Retaliate

What Happened?

President Donald Trump has pushed forward with 25% tariffs on Canadian and Mexican goods that took effect Tuesday.

The move now threatens a possible trade war with its closest trading partners and could lead to higher prices for American consumers.

Trump also doubled tariffs on Chinese imports after he amended the initial plan by striking the words '10 percent' and replacing it with '20 percent' instead.

Canadian energy products would be levied at a lower rate of 10%, according to a draft public notice of the rules.

The president has claimed illicit drugs are still pouring into the U.S., 'at very high and unacceptable levels.'

China has implemented retaliatory measures by imposing tariffs up to 15% on a wide array of U.S. farm exports.

Prime Minister Justin Trudeau announced Canada would plaster tariffs on more than $100 billion of American goods over the course of 21 days.

Mexico said it would announce retaliatory measures Sunday, according to reports.

The Trump administration still plans to implement reciprocal tariffs on all major U.S. trading partners, including allies, beginning April 2.

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

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

Why it Matters

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.’

Trump has viewed these tariff measures as 'fair' by eliminating any trade imbalances.

China, Mexico, and Canada accounted for more than 40% of U.S. imports last year. That amounted to over $1.4 trillion worth of goods, according to Commerce Department data.

Mexico and Canadian officials reportedly traveled to Washington last week to hold discussions ahead of the measure.

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

He has also pointed out that America has helped many countries throughout the years at great financial cost.

The White House will review all its existing trade agreements to evaluate its current trade leverage worldwide.

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

How it Affects You

Reports have stated that a trade war with Canada would likely cause a 'shallow' recession in the U.S.

Researchers have also cited that a ‘tax hike’ of more than $1,200 per year on American households could result from 25% tariffs on Mexican and Canadian imports.

That amount would likely increase from reciprocal tariffs across the board.

It will be key to monitor if Trump's actions raise U.S. revenue to cover other domestic spending priorities or cause more pressure for the everyday consumer.