US President Donald Trump is set to enforce tariffs on Saturday, imposing a 25% duty on imports from Mexico and Canada, and a 10% tariff on goods from China, according to the White House.
However, on Friday, Trump announced that Canadian oil would be subject to a lower tariff rate of 10%, with implementation potentially delayed until February 18.
Additionally, the president stated his intention to impose tariffs on the European Union at a later date, citing what he described as unfair treatment of the United States by the bloc.
White House press secretary Karoline Leavitt attributed the tariffs on Canada and Mexico to “the illegal fentanyl that they have sourced and allowed to distribute into our country, which has killed tens of millions of Americans.”
Trump has also repeatedly framed the measure as a response to the large influx of undocumented migrants entering the U.S. as well as trade imbalances with its neighboring countries.
“These are promises made and promises kept by the President,” Leavitt said during a White House news briefing on Friday.
During his election campaign, Trump had threatened tariffs of up to 60% on Chinese goods but refrained from immediate action upon re-entering the White House, instead directing his administration to study the issue.
Since 2018, U.S. imports from China have plateaued, a trend economists attribute partly to the escalating tariffs Trump imposed during his first term.
Earlier this month, amid renewed concerns over a potential trade war, a senior Chinese official warned against protectionist policies but did not explicitly mention the U.S.
Speaking at the World Economic Forum in Davos, Switzerland, Chinese Vice Premier Ding Xuexiang emphasized the need for a “win-win” approach to trade disputes and expressed China’s intent to expand imports.
China, Canada, and Mexico collectively account for 40% of U.S. goods imports, raising concerns that the new tariffs could spark a significant trade conflict and lead to rising prices domestically.
Canadian Prime Minister Justin Trudeau responded to the tariff announcement on Friday, stating, “It’s not what we want, but if he moves forward, we will also act.”
Both Canada and Mexico have signaled their intention to retaliate with countermeasures while also seeking to reassure Washington that they are addressing border-related concerns.
Imposing tariffs on U.S. oil imports from Canada and Mexico could jeopardize Trump’s pledge to lower the cost of living.
Tariffs function as taxes on imported goods, making them more expensive and theoretically discouraging their purchase in favor of domestic alternatives, which can bolster the local economy.
However, tariffs on imported energy could drive up costs for businesses and consumers, potentially leading to increased prices on essentials such as fuel and groceries.
Approximately 40% of the crude oil processed in U.S. refineries is imported, with Canada being the primary supplier.
On Friday, Trump acknowledged that tariff costs are sometimes transferred to consumers and admitted that his plans might cause short-term disruptions.
Mark Carney, former governor of both the Bank of Canada and the Bank of England, weighed in on the matter during an interview with BBC Newsnight on Friday. He warned that the tariffs would stifle economic growth and contribute to inflation.
“They’re going to damage the U.S.’s reputation around the world,” said Carney, who is also a contender to succeed Trudeau as leader of Canada’s Liberal Party.