Trump set to launch Canada, Mexico tariffs on March 1

Tariffs could disrupt $1.6 trillion North American trade and potentially end the free trade system

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US President Donald Trump is expected to announce new tariffs on imports from Canada and Mexico, effective March 1. However, sources familiar with the matter say the tariff plan will include a process for the two countries to seek specific exemptions for certain goods.

While deliberations are still fluid ahead of Trump's self-imposed February 1 deadline, the tariff rate is yet to be finalized. Trump has previously indicated that he intends to impose a 25% tariff on imports from both countries, with some exemptions likely for specific imports.

According to an administration official, the tariff review continues, and while some exemptions could be considered, they will be "few and far between." The 28-day delay before implementation is seen as a more cautious approach, providing time for negotiations over measures to address issues such as illegal immigration and the flow of fentanyl opioids across the US border.

These tariffs could significantly disrupt North American trade, valued at $1.6 trillion, and potentially end the free trade system that has integrated the three economies for the last 30 years. The tariffs are being considered as a response to what Trump describes as the need for Canada and Mexico to take stronger action on these issues.

Trump is also considering a 10% tariff on Chinese imports but has not yet made a decision. The sources mentioned that the March 1 tariffs would only apply to Canada and Mexico. Trump is contemplating whether to exempt Canadian and Mexican oil imports, as crude oil is a major import from both countries and could have an impact on US gas prices.

The U.S. President is expected to invoke the International Emergency Economic Powers Act (IEEPA), which would allow him to impose the tariffs swiftly in response to the fentanyl crisis and illegal immigration.

Potential economic impact and retaliation

The tariffs, which could include goods such as aluminum, lumber, fruits, vegetables, and electronics, are expected to increase prices for US. consumers. Economists have warned that tariffs will lead to higher costs for businesses, who will either pass on the extra costs to consumers or absorb the losses themselves.

Canada has already prepared retaliatory measures, with Prime Minister Justin Trudeau stating that the country would respond "forcefully" if Trump goes ahead with the tariffs. Canada could target up to $150 billion in US imports, including products like orange juice from Florida, Trump’s home state.

Meanwhile, Mexico’s President Claudia Sheinbaum has said she will wait patiently for Trump's decision but has made it clear that Mexico will retaliate if the tariffs go ahead, warning of job losses and higher prices for US consumers.

The ongoing tariff dispute has already caused political tension and sparked fears of a broader trade war, potentially disrupting markets and international relations.