On 1 February 2025, US President Donald Trump signed a presidential order introducing major new taxes on goods brought into the country from Canada, Mexico, and China.
The taxes include a 25% charge on goods imported from Canada and Mexico, with a lower 10% rate for Canadian energy goods, and a 10% tax on goods from China. These new tariffs will start on 4 February 2025.
A tariff is a tax that a government places on goods imported from other countries. It’s like an extra fee added to the cost of foreign products when they enter a country.
The goal of a tariff is often to make imported goods more expensive, which will definitely force people to buy products made locally instead. For example, if steel from Cananda costs $100, a 25% tariff adds $25, making the total $125.
However, the Trump administration justifies these tariffs are ways to fight back illegal immigration and drug trafficking mostly coming from the neighboring nations.
"Today's tariff announcement is necessary to hold China, Mexico, and Canada accountable for their promises to halt the flood of poisonous drugs into the United States," the White House said in a statement on X on Saturday.
Trump posted on his Truth Social platform: "This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl."
In response, Canadian Prime Minister Justin Trudeau announced retaliatory tariffs of 25% on a range of U.S. products, starting with C$30 billion worth on 4th February, increasing to C$155 billion in three weeks.
Trudeau urged Canadians to reduce their purchases of American goods and reconsider travel plans to the U.S. More so, Mexican President Claudia Sheinbaum also declared plans for countermeasures against U.S. products, while expressing a willingness to collaborate with the U.S. to address shared concerns.
Trump has indicated he is ready to escalate the tarrifs if the countries retaliate. In 2024, Canada, Mexico and China accounted for more than 40% of imports into the US last year.
Economists warn that these actions could lead to higher prices for consumers, disrupt supply chains, and potentially slow economic growth in all involved countries. The situation has raised concerns about a possible trade war among these long-standing trading partners.
