The Trump administration initiated long-awaited tariffs on top US trading partners Saturday. Mexico faces a 25% tariff, China 10%, and Canada 25%, but Canadian energy imports will see a lower duty of just 10%.
President Donald Trump signed executive orders on Saturday imposing his long-awaited tariffs on America’s top trading partners.
Mexico faces a 25% tariff, according to the White House, which said it will remain in place until the country “cooperates with the U.S. in the fight against drugs.”
Canada is also getting hit with a 25% tariff, though imports of its energy products will carry a 10% duty, as the White House called for cooperation on drug trafficking and border security.
And Trump slapped a 10% tariff on China, conditioning it on full cooperation in the fight against fentanyl.
The tariffs will go into effect at 12:01 a.m. Eastern Time on Tuesday.
There will be no exceptions to the tariffs, and even a loophole that allows small shipments to enter duty free will be suspended, impacting e-commerce.
Canadian officials told the New York Times that Ottawa is poised to retaliate this evening, though Trump’s executive orders say tariffs could rise in the event of retaliation.
On Friday, Canadian Natural Resources Minister Jonathan Wilkinson signaled that tariffs on US imports will be more targeted to avoid too much disruption on consumers.
“You will find when we do respond, at least initially, that we will focus on tariffing American goods that actually are sold in significant quantities in Canada, and especially those for which there are readily available alternatives for Canadians,” he told Bloomberg.
The lighter tariff on Canadian energy, which presumably would include crude oil and refined products, also suggests the White House seeks to avoid making Americans pay more for fuel and stoking inflation.
Canada accounts for about 60% of US oil imports. Some US refineries, especially in the Midwest, rely heavily on Canadian crude to produce gasoline and other fuels.
Meanwhile, some northern states import key fuels directly from Canadian refineries. On Friday, Sen. Susan Collins, R-Maine, said on X that 95% of the heating oil used by most Mainers comes from refineries in Canada, while the Air National Guard Base in Bangor “depends completely” on jet fuel and diesel from Canada.
“From fisheries to potato farmers to paper mills, these tariffs will have a significant impact on Maine’s economy and risk increasing costs for our residents,” she added.
The US, Mexican and Canadian auto sectors are also deeply integrated as giants like General Motors and Ford have factories on both sides of the border.
The White House’s announcement on Saturday dashed hopes that it would take a more gradual approach to minimize the immediate impact on consumers. Sources told Bloomberg last month, that some Trump officials considered increasing tariffs by about 2% to 5% a month.
If the tariffs ramp up price pressure, that could force the Federal Reserve to hold off on further rate cuts, and some on Wall Street see the central bank hiking rates later this year.
The three countries that were hit with tariffs Saturday are the largest US trading partners. In 2022, the US imported $536 billion in Chinese goods, $455 billion in Mexican goods, and $437 billion in Canadian products, according to data from the U.S. Trade Representative.
The US imports oil from Mexico as well as a variety of agricultural products, which would likely send some food costs higher. Many imported electronic goods, like Apple iPhones, would also get pricier with tariffs on China.
