WASHINGTON — President Donald Trump slapped sweeping tariffs on goods from Mexico, Canada and China on Saturday, sending shock waves through the global supply chain and sparking fears of a disruptive trade war that could dramatically raise costs for U.S. consumers.
Trump signed executive orders placing duties of 25% on imports from Mexico and Canada, except for a 10% rate on Canadian energy products. He imposed a 10% tax on all imports from China. The White House said the tariffs would go into effect on Tuesday, and could be raised if the targeted countries retaliate with tariffs of their own, as they have threatened.
In a post on his social media platform, the president said he was taxing the three countries because they aren’t doing enough to stop the flow of undocumented immigrants and drugs into the United States.
Mexican President Claudia Sheinbaum struck back at Trump, detailing what her country has done to fight drug trafficking and slow migration and criticizing the U.S. for its high levels of drug consumption. She said Mexico would retaliate with its own tariffs on American imports, adding: “Problems are not resolved by imposing tariffs, but by talking and engaging in dialogue.”
Canadian Prime Minister Justin Trudeau, who had also vowed retaliatory tariffs, said in a post on X that “Canada is prepared.”
The two nations and China are America’s top trading partners, supplying the U.S. with food, medicine, oil, cars, timber and electronics.
The tariffs against Canada and Mexico upend a trade pact that dates back three decades and is the linchpin of many tightly integrated industries across North America. Trump himself signed the newest version of the trade accord during his first term, praising the 2020 U.S.-Mexico-Canada Agreement as “the fairest, most balanced and beneficial trade agreement we have ever signed into law.”
The tariffs threaten to deeply disrupt the economies of Mexico, Canada and China and drive up consumer prices in the U.S.
Experts say some effects will be significant and quickly felt, with American consumers probably finding higher prices for fresh vegetables and fruits and other perishable imports in a matter of days.
“Foreigners don’t pay the tariffs; American businesses and consumers do,” said Jock O’Connell, a trade expert at Beacon Economics, a Los Angeles-based research firm.
Americans are still smarting from a surge of food prices since the onset of the COVID-19 pandemic. High inflation was widely considered an important factor in Trump’s election, and the president has promised to bring down prices for groceries and other goods. But these new tariffs are almost certain to do the opposite, economists say.
The U.S. imports more than $900 billion of products from Canada and Mexico, and a 25% tariff is huge given that goods have crossed North American borders duty-free for many years.
“Is the Trump administration comfortable with hiking the price of avocados and guacamole ahead of the Super Bowl?” said Joseph Brusuelas, chief economist at the accounting firm RSM US, adding that he was not joking.
For many other products, prices may start to increase only as inventories are depleted. Car prices will almost surely rise. U.S. auto manufacturing is so interlinked with Mexico and Canada, with parts going back and forth across borders many times, that analysts say they’re not really American cars but North American cars.
Michigan Gov. Gretchen Whitmer condemned the tariffs and the effect they would have on the auto industry in her state, which Trump flipped in 2024: “A 25% tariff will hurt American autoworkers and consumers, raise prices on cars, groceries and energy for working families and put countless jobs at risk. Trump’s middle-class tax hike will cripple our economy and hit working-class, blue-collar families especially hard.”
Gas prices may also rise, especially in the Great Lakes and Rocky Mountain West, which depend on Canadian oil. Trump has repeatedly talked about bringing down the cost of gas, but the U.S. still imports billions of dollars of crude — and ramping up domestic production isn’t so easy or quick.
The 10% tariffs on China will add to 10% to 25% duties that Trump imposed on many Chinese imports during his first term, and which former president Joe Biden kept in place. That will hit American household pocketbooks broadly because China is such a big supplier of consumer items.
Under the U.S.-Mexico-Canada trade agreement, any country has the right to pull out at any time. And a U.S. president can impose new tariffs without approval from Congress by invoking the International Emergency Economic Powers Act, which authorizes executive action to counter threats to national security, foreign policy or the economy.
Trump had been warning for months that he planned to impose tariffs on imports in a bid to lure manufacturing back to the United States. Campaigning before the November election, he vowed at one point to establish an across-the-board tax of 10% or 20% on all goods entering the U.S. At another, he threatened a 200% tariff on vehicles from Mexico.
“Come make your product in America,” he told companies in a speech at the World Economic Forum earlier this year. If not, he said, “then very simply you will have to pay a tariff.”
But Trump sees tariffs also as a negotiating tactic to extract compromises from other nations on matters that have little to do with trade.
His executive order imposing tariffs against Canada blames the country for “failing to devote sufficient attention and resources or meaningfully co-ordinate with United States law enforcement partners to effectively stem the tide of illicit drugs.”
He has said that Mexico must suffer tariffs because it hasn’t done more to stop migrants from reaching the U.S. border.
But experts questioned Canada and Mexico’s ability to further curb drug and people smuggling. A 2022 report commissioned by the U.S. Congress found that “Canada is not known to be a major source of fentanyl, other synthetic opioids or precursor chemicals to the United States, a conclusion primarily drawn from seizure data.”
Others said the tariffs have the potential to spur more migration.
Economies in Mexico and Canada rely much more heavily on the U.S. than the other way around, and the threat of tariffs has made the peso and Canadian dollar very volatile in recent weeks.
The value of Mexico’s exports and imports amounts to almost 90% of the country’s gross domestic product, according to World Bank data. Economists warn that even a small increase in tariffs on goods destined to the U.S. poses serious risks for the economy.
“Under the worst-case scenario, the Mexican economy will fall into recession, the currency will depreciate, and inflation will rise,” reads a report released by the economic research firm Moody’s Analytics.
Analysts say that if tariffs drag down the Mexican economy, more Mexican workers without proper documentation will seek to enter the U.S.
“If Mexico goes into a recession, you’ll see a surge in immigration,” said economist Brusuelas.
Evan Ellis, a research professor of Latin American studies at the U.S. Army War College’s Strategic Studies Institute, described tariffs as a “catastrophic risk.”
“If you essentially deep-six the Mexican economy … there are people who are going to once again flow across the U.S. border,” he said.
The country’s economy is already on shaky ground. Mexico faces its largest budget deficit since the 1980s. Data show 36% of the population lives in poverty with 7% living in extreme poverty.
A severe recession in Mexico in the 1990s contributed to some 5 million Mexicans immigrating to the U.S.
Mexican President Claudia Sheinbaum has insisted that Mexico has a plan to counter tariffs.
“We are prepared for any scenario,” she told journalists on Friday, although she said that Mexico had been “doing everything in our power” to prevent tariffs. “What do we want? That dialogue with respect prevails.”
Canadian officials have also promised an aggressive response.
“Being smart means retaliating where it hurts,” said Chrystia Freeland, the former finance minister who represented Canada in USMCA negotiations. “Our counterpunch must be dollar-for-dollar — and it must be precisely and painfully targeted: Florida orange growers, Wisconsin dairy farmers, Michigan dishwasher manufacturers, and much more.”
If China, Canada and Mexico retaliate by slapping tariffs on American products entering their markets, that will very likely slow the volume of trade. The ripple effects will be felt across the entire supply chain, hurting business and employment at ports, warehouses and other logistics and transportation operations.
Higher inflation from tariffs may hit Los Angeles especially hard coming soon after the fires, which appear to be pushing up prices for rents and other services and products.
“The timing couldn’t be worse. It will make for a double whammy for Southern California,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University.
During his first term, Trump in 2018 imposed tariffs on steel from Mexico and other countries, prompting counter-tariffs on American farm goods and straining U.S.-Mexico relations.
At the time, he also threatened broader tariffs on all Mexican goods, but he eventually backed off after American business leaders complained that it would hurt them and his administration extracted a promise from Mexican authorities to do more to stop migrants from reaching the U.S. border.
Marcelo Ebrard, Mexico’s economy secretary, suggested last year that the only goal of tariffs is to achieve political gains, given the makeup of the highly integrated global economy.
“The United States economy is not a manufacturing economy,” said Ebrard. “And I’m sorry, but it will not be that way again.”
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(Linthicum reported from Albuquerque, New Mexico, and Lee reported from Washington. Times staff writer Seema Mehta contributed to this report.)
