US President Donald Trump will enforce tariffs starting Saturday, imposing a 25% duty on Mexico and Canada and a 10% tariff on China, according to the White House.
However, on Friday, Trump stated that Canadian oil would face a lower tariff rate of 10%, which is set to take effect later, on February 18.
The president also indicated his intention to impose tariffs on the European Union in the future, citing what he perceives as unfair treatment of the US by the bloc.
White House press secretary Karoline Leavitt explained that the tariffs on Canada and Mexico were a response 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 reiterated that these measures aim to address both the influx of undocumented migrants crossing US borders and the trade deficits with its neighboring countries.
During a White House press briefing on Friday, Ms. Leavitt stated, “These are promises made and promises kept by the President.”
While campaigning for re-election, Trump had threatened to impose tariffs of up to 60% on Chinese-made products. However, rather than taking immediate action upon returning to the White House, he opted to order his administration to study the matter further.
US goods imports from China have remained steady since 2018, a trend economists attribute in part to the series of escalating tariffs Trump imposed during his first term.
Earlier this month, a senior Chinese official warned against protectionism, as Trump’s return to office renews the prospect of a trade war between the world’s two largest economies. However, the official did not directly reference the US.
Speaking at the World Economic Forum in Davos, Switzerland, China’s Vice Premier Ding Xuexiang emphasized that his country seeks a “win-win” resolution to trade tensions and is looking to expand its imports.
China, Canada, and Mexico collectively account for 40% of US goods imports, raising concerns that these new tariffs could trigger a major trade conflict and contribute to rising consumer prices in the US.
On Friday, Canadian Prime Minister Justin Trudeau remarked, “It’s not what we want, but if he moves forward, we will also act.”
Both Canada and Mexico have signaled their intent to respond to US tariffs with countermeasures of their own while also reassuring Washington that they are taking steps to address concerns about their borders.
Should US oil imports from Canada and Mexico be subjected to tariffs, it could undermine Trump’s pledge to lower the cost of living.
Tariffs function as a tax on imported goods, which, in theory, discourages purchases by making foreign products more expensive.
The objective is to incentivize consumers to buy domestically produced goods, thereby boosting the national economy.
However, tariffs on imported energy could lead to increased costs for businesses and consumers, potentially raising prices on items ranging from fuel to groceries.
Approximately 40% of the crude oil processed in US refineries is imported, with Canada supplying the majority of those imports.
On Friday, Trump acknowledged that tariff-related costs are sometimes passed on to consumers and conceded that his policies might cause short-term disruptions.
Mark Carney, former governor of both Canada’s and England’s central banks, warned during an interview with BBC Newsnight that the tariffs would negatively impact economic growth and contribute to inflation.
“They’re going to damage the US’s reputation around the world,” said Carney, who is also a potential candidate to succeed Prime Minister Trudeau as leader of Canada’s Liberal Party.