President Donald Trump has officially imposed new tariffs on Chinese, Mexican, and Canadian imports, stating that the measures will remain in place until the national emergency over fentanyl and illegal immigration is resolved, Reuters reported.
Under the new policy:
- Energy imports from Canada will face a 10% tariff.
- Energy imports from Mexico will be hit with a 25% tariff.
Indefinite Tariffs Amid Trade Tensions
A White House briefing document indicated that the tariffs will stay in place “until the crisis subsides”, though it did not specify what actions the three countries must take to qualify for relief.
This aggressive trade move follows Trump’s repeated warnings since winning last year’s election. Experts say the tariffs could trigger retaliation, raising the risk of a trade war that could disrupt economies across North America and beyond.
Under Trump’s executive order, the tariffs will take effect at 12:01 a.m. on February 4 (local time). However, imports already in transit before 12:01 a.m. on February 1 will be exempt from the new tariffs.
Trump Declares National Emergency to Justify Tariffs
To justify his sweeping trade actions, Trump invoked emergency powers under the International Emergency Economic Powers Act and the National Emergencies Act, granting him broad authority to impose tariffs in response to what he calls a “crisis at the border.”
The White House confirmed that no exceptions will be made to the new tariffs. Specifically, for Canada, the U.S. government will eliminate the “de minimis” exemption for shipments valued under $800, meaning all Canadian imports—regardless of value—will be subject to tariffs.
Despite the major policy shift, Trump was seen golfing at his Mar-a-Lago resort in Florida on February 1 before signing the executive order. He did not hold a press briefing on the matter.
Economic Shockwaves and Market Volatility
For weeks, Trump threatened to impose the tariffs and had set February 1 as the deadline for Canada and Mexico to take more action against illegal immigration and fentanyl trafficking.
Less than two weeks into his second term, Trump has upended long-standing trade norms, reshaping U.S. relations with its closest allies.
On January 31, Trump acknowledged that the tariffs may cause economic disruption but insisted they are necessary to protect U.S. national interests.
A new economic analysis by EY Chief Economist Greg Daco predicts that the tariffs will:
- Reduce U.S. economic growth by 1.5 percentage points this year
- Push Canada and Mexico into a recession
- Trigger “stagflation” in the U.S.—a combination of slowed growth and higher inflation
"We have emphasized that aggressive tariff hikes against America’s trading partners could create a stagflationary shock—slowing the economy while driving up inflation—while also increasing financial market volatility," Daco wrote on February 1.
That volatility was already evident on January 31, when:
- The Mexican peso and the Canadian dollar both dropped sharply after Trump's tariff announcement.
- U.S. stock markets declined, reflecting concerns over potential economic fallout.
- U.S. Treasury bond yields rose, signaling market uncertainty.
A New Trade War?
With Trump’s aggressive new trade stance, experts warn that Canada, Mexico, and China may retaliate with countermeasures, escalating tensions and potentially disrupting global trade flows.
The coming weeks will be crucial in determining whether Trump’s high-stakes tariff strategy succeeds or sparks a full-blown trade war—one that could impact businesses, supply chains, and consumers worldwide.
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