Trump's Tariffs on Canada, Mexico Raise Trade War Concerns in U.S.

What Happened?

Many across North America are now bracing for potential trade wars impacts. That’s after President Donald Trump announced imposing 25% tariffs beginning Saturday on Canada and Mexico.

White House Press Secretary Karoline Leavitt confirmed Thursday that Trump will impose the tariffs as well as a 10% duty on China.

The move could reportedly disrupt nearly $1.6 trillion in annual trade with consumers and farmers who could soon feel the burden of impact.

Trump has stayed true to his claims that suggest America’s closest neighbors and largest trading partners are allowing large scales of undocumented migrants and drugs to flood into the U.S.

In addition, Trump said when addressing the media Thursday in the Oval Office, 'subsidies that we’re giving to Canada and to Mexico in the form of deficits' have influenced his decision.

He added that those tariffs may or may not rise with time.

Last week, U.S. stocks rose following President Trump's previous announcement that imposing tariffs was a strong possibility on Canada and Mexico by Feb. 1.

The U.S. dollar had recovered from its biggest percentage drop in 14 months, according to Reuters.

Meanwhile, the Canadian dollar and Mexican peso had reportedly fallen as much as 1.4% against the greenback from the news.

Canada’s Prime Minister Justin Trudeau reportedly said his administration will respond swiftly to the imposed measures.

'If the president does choose to implement any tariffs against Canada, we’re ready with a response – a purposeful, forceful but reasonable, immediate response,' said Prime Minister Trudeau.

The Trump administration had recently walked back its tariff threats on Colombia after the country reversed course to accept deported migrants being returned on military planes.

Why it Matters

The White House previously released a memorandum that called for a review of existing U.S. trade agreements and to seek trade leverage recommendations for the U.S.

But experts warn that Trump's stance threatens the potential trading relationship with two of the nation's biggest allies surrounding its auto supply chain and energy imports.

The current United States–Mexico–Canada Agreement is up for review on July 1, 2026.

If the three countries do not agree to extend USMCA during the first review period, the agreement will terminate in 2036.

According to 2022 data, the three countries governed a trade flow of $1.8 trillion in goods and services.

Mexico’s President Claudia Sheinbaum had reportedly said during a November news conference that Trump's tariff measure could destroy 400,000 U.S. jobs and drive up consumer prices.

'If there are U.S. tariffs, Mexico would also raise tariffs,' Sheinbaum said.

Research showed that over 80% of Mexican exports went to the U.S., and manufacturing exports totaled more than $127 billion.

More recently, Sheinbaum reportedly limited her response by saying Mexico will respond 'step by step.'

How it Affects You

A 25% U.S. tariff on Canadian imports would likely drive up inflation and push the country into a 'shallow' recession in 2025, according to reports.

Americans await how the Trump administration addresses these concerns without straining key relationships with world partners.

Prices at the pump, the grocery store, and even automotive-related needs are key consumer areas to watch out for in the coming months.