President Donald Trump’s newly imposed tariffs on Canada, Mexico, and China took effect early Tuesday.
The tariffs, implemented under the International Emergency Economic Powers Act (IEEPA), are part of what the president calls a necessary step to save American lives and bring jobs back home.
Under the new rules, a 25% tariff now applies to most Canadian and Mexican imports—a measure that had been delayed for 30 days as officials engaged in last-minute negotiations.
Chinese imports, already hit with a 10% levy last month, face an increased tariff of 20%.
According to Trump, both moves are meant to urge these nations to intensify efforts against illegal fentanyl shipments that contribute to the opioid crisis in the U.S.
“Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels,” Trump wrote on Truth Social. “A large percentage of these Drugs, much of them in the form of Fentanyl, are made in, and supplied by, China.”
Administration officials say the new tariffs also target longstanding trade imbalances.
Commerce Secretary Howard Lutnick voiced the president’s determination to secure stronger commitments from Canada and Mexico in stopping fentanyl trafficking, stating on Monday, “We really need to save American lives. And the president really cares about saving American lives. So they’ve got to get the fentanyl down.”
Canadian Retaliation
Canadian Prime Minister Justin Trudeau responded late Monday by announcing 25% tariffs on $155 billion worth of American goods, starting immediately with $30 billion in U.S. exports and expanding to the full amount in three weeks’ time. These duties, Trudeau warned, would raise the cost of groceries, gas, and cars for American consumers.
“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, contending that the volume of fentanyl entering the U.S. from Canada is minimal.
Canada insists it has taken significant steps to combat any northbound flow of precursor chemicals, pointing to a $1.3 billion border initiative and nearly complete shutdown of fentanyl seizures from Canada since December.
China’s Response
The Chinese government also retaliated, unveiling tariffs of up to 15% on key U.S. agricultural imports like chicken, pork, soy, beef, seafood, fruits, and dairy. These measures, scheduled to take effect on March 10, follow Trump’s decision to double existing tariffs on Chinese goods from 10% to 20%.
Additionally, Beijing expanded its “unreliable entities” list to include more American companies, barring them from certain trade and investment activities in China.
The Chinese Commerce Ministry explained that the new tariffs aim to protect China’s national interests.
While the U.S. remains a major exporter of farm products to China, analysts note that Beijing has diversified its agriculture supply chain in recent years, turning to Brazil and Argentina for staples like soybeans.
Despite the president’s confidence that the tariffs will bring factories back to the United States and compel trading partners to curb fentanyl trafficking, financial markets took a hit.
The Dow Jones Industrial Average dropped nearly 650 points on the eve of the tariffs, with similar declines in the S&P 500 and Nasdaq Composite Index. Industry experts anticipate higher prices on everyday items, including food and automobiles, as the new levies ripple through supply chains.
Trump, however, has downplayed concerns that tariffs will significantly fuel inflation. Citing low consumer-cost increases during previous trade disputes, he expressed optimism that any disruptions would be “short-term” and ultimately beneficial for American manufacturing and jobs.
Moving forward, the administration is set to expand tariff measures further, with a White House official signaling additional “reciprocal” levies on countries like those in the European Union and Japan next month.