Trump puts tariffs on thousands of goods from Canada and Mexico, risking higher prices

President Donald Trump has moved forward with a plan to put sweeping tariffs on all goods coming into the United States from Canada and Mexico, threatening a trade war with its closest trading partners — and higher prices for Americans on thousands of consumer goods.

The U.S. was scheduled to begin collecting a 25% tariff on nearly all goods from Mexico and Canada starting at 12:01 a.m. Tuesday, according to a draft public notice of the rules posted Monday. Canadian energy products would be levied at a lower rate of 10%.
Businesses ranging from automakers to alcohol producers have warned that the added costs for companies to import goods from Canada and Mexico will have wide-ranging implications across the American economy. While some companies will look to source their goods from other countries or move production to the U.S., those moves could take years.

In the meantime, companies have said they will have to pay the tariffs and then pick from two options: either pass the added costs along to consumers in the form of higher prices, or absorb the fees and either cut costs elsewhere or take lower profits.

On Monday, Trump also added an additional 10% tariff on all imports from China on top of the 10% tariff he put on Chinese goods last month, which includes products such as electronics, footwear, medicines and cosmetics. Those tariffs are in addition to tariffs already put in place during Trump's first term in office.

Trump said he is putting the tariffs in place, in part, to pressure the countries into stopping undocumented immigrants and fentanyl from entering the U.S. via their borders. More than 107,000 people died from drug overdoses in 2023, according to the Drug Enforcement Administration, with nearly 70% of those deaths from opioids, including fentanyl. Nearly all of the 21,900 pounds of fentanyl seized in 2024 was at the southern border, with just 43 pounds of fentanyl seized at the northern border, according to data from Customs and Border Protection.

The start of a back-and-forth retaliation
The move risks a tit-for-tat trade war with Mexico, Canada and China that could hurt U.S. businesses selling their products to those countries and upended one of the signature deals of Trump's first term: the USMCA trade agreement between the U.S., Mexico and Canada.

That agreement, which Trump touted at the time as a negotiating victory, largely allowed products to move between the three countries tariff-free, similar to how they had for decades under the previous North American Free Trade Agreement or NAFTA. Under the terms of the deal, the agreement wasn’t supposed to be up for renegotiation until July 2026, but Trump’s move to impose new tariffs could throw the entire agreement into jeopardy.

Mexican President Claudia Sheinbaum indicated in remarks Tuesday that her country would respond by Sunday. In a news conference, she said the action would include "tariff and nontariff measures." Sheinbaum also said that Mexico had already taken steps during the past month to crack down on drug gangs and trafficking flows.

Canada will move ahead with an earlier plan to impose 25% tariffs on 155 billion Canadian dollars ($107 billion) of American goods if the U.S. tariff took effect as scheduled. Tariffs on $20.7 billion worth of goods, including orange juice, peanut butter, wine and coffee, will take effect immediately, while tariffs on the remaining $86.3 billion in U.S. products will begin in 21 days, Canadian Prime Minister Justin Trudeau said in a statement late Monday. They will remain until the U.S. trade action is withdrawn.

"We don't want this. We want to work with you as a friend and ally, and we don't want to see you hurt either, but your government has chosen to do this to you," Trudeau said during a press conference Tuesday in remarks directed at the American people.

Then, pivoting to speaking directly to Trump, Trudeau said: "Even though you're a very smart guy, this is a very dumb thing to do."

He noted that even though less than 1% of fentanyl seized by the U.S. is coming across the Canadian border, the country has been taking action to further crackdown on the illegal drug trade. As a result, Trudeau said there was a 97% drop in fentanyl seizures from January compared to December, "to a near zero low of less than half an ounce seized in January."