Trump Plans 25% Tariffs on Mexico and Canada Starting February 1

Washington DC: President Donald Trump announced plans to impose a 25% tariff on imports from Mexico and Canada starting February 1. The decision stems from his concerns over illegal immigration and drug trafficking at the US borders.

“We’re thinking about 25% tariffs on Mexico and Canada because they are allowing large numbers of people across the border,” Trump said during a press briefing in the Oval Office on Monday.

Tensions Over US-Mexico-Canada Agreement

The tariffs could severely impact the US-Mexico-Canada Agreement (USMCA), which regulates over $1.8 trillion in trade among the three nations annually. Both Mexico and Canada have expressed their intent to retaliate if the tariffs take effect.

Trump’s inaugural speech emphasized reducing dependence on foreign nations and increasing tariffs to protect American citizens and businesses. He specifically criticized Canada for allowing fentanyl smuggling and illegal migration across the northern border.

Economic Reactions

The announcement has already caused economic ripples:

• The Canadian dollar and Mexican peso both dropped by 1.4% against the US dollar.
• Analysts warned the tariffs could increase costs for American automakers, leading to higher vehicle prices.

Bloomberg Economics estimated that tariffs could disrupt North America’s integrated auto industry. Around $97 billion worth of auto parts and 4 million vehicles imported from Canada and Mexico could be affected, raising the average price of new cars in the US by up to $3,000.

Border Issues Highlighted

According to US Customs and Border Protection, there were over 1 million illegal crossings at the US-Mexico border in 2024. Drug seizures included 20,600 pounds of fentanyl from the southern border and 50 pounds from the northern border.

Canada and Mexico’s Response

In response to Trump’s announcement:

• Canada has committed $1 billion for border security, including drones and helicopters, to strengthen its northern border.
• Mexico has carried out significant fentanyl seizures and promised to take steps to address US concerns.

Canadian Prime Minister Justin Trudeau previously stated that migrant crossings from Canada into the US are minimal and that his government has been working closely with US officials on border security and drug control measures.

Global and Domestic Impact

Although Trump hinted at potentially imposing universal tariffs on all foreign imports in the future, he stated that such actions are not imminent.

Chinese markets experienced slight relief as no immediate tariffs were announced against China, while Wall Street investors speculated that these measures could slow global trade and raise inflation in the US.