In a bold move, US President Donald Trump has announced that 25% tariffs on imports from Canada and Mexico will take effect imminently, potentially on March 4, 2025, after a one-month delay. This decision marks the largest import volume affected in world trade history, encompassing $918.54 billion in imports and impacting 27.9% of total US imports worldwide.
The tariffs are set to deal a significant blow to the exports of both Canada and Mexico, as the US accounted for 75% of Canada's total exports and 80% of Mexico's in 2024. This move is expected to disrupt the North American supply chain, which has been built on the zero-tariff USMCA agreement. Additionally, Canada and Mexico have announced their readiness to enact similar retaliatory measures, which could further harm US exports that make up one-third of its global market.
The US, while being a leading oil and gas producer and exporter, relies heavily on imports from Canada, which supplied $106.25 billion worth of oil and gas in 2024, accounting for 60% of the total supply. To mitigate this dependence, only a 10% tariff has been applied to oil and gas imports instead of the full 25%. Nevertheless, this adjustment is anticipated to lead to higher gas prices for US manufacturers and consumers and may cause a market shift by Canadian suppliers.
Economists warn that these tariffs could have broader implications for the US economy, potentially triggering a rise in inflation and disrupting established trade relationships. The coming months will be crucial in determining the full impact of these tariffs on North American trade dynamics.
Reference(s):
cgtn.com
