North American businesses, consumers, and farmers are bracing for a major economic shake-up as former US President Donald Trump prepares to impose 25% tariffs on imports from Canada and Mexico.
The move, set to take effect from Saturday, threatens to disrupt nearly $1.6 trillion in annual trade, escalating tensions between the three economic powerhouses.
Trump’s decision is driven by demands for stricter immigration controls and tougher measures against fentanyl trafficking—issues he claims are critical to US national security.
However, the looming tariffs could trigger significant price hikes on essential goods, from food to automobiles, while sparking retaliatory measures from America’s trading partners.
Uncertainty over implementation and economic fallout
Despite Trump’s firm deadline, industry experts remain uncertain about whether the full 25% tariff will be imposed immediately or rolled out gradually.
The White House has indicated that even if announced, the tariffs may require a two-to-three-week notice period before US Customs and Border Protection can begin collections.
Businesses and trade groups are closely monitoring whether negotiations with Canada and Mexico could lead to a delay or potential exemptions.
The economic impact of these tariffs is expected to be severe.
The North American supply chain is deeply integrated, particularly in industries like automobiles, agriculture, and energy.
Automakers, for example, rely on cross-border supply routes where parts move between countries multiple times before final assembly.
Economists warn that higher import costs could translate to increased prices for consumers and potential job losses in the US.
Canada and Mexico prepare for retaliation
Both Canada and Mexico have signaled they will not sit idle if Trump enforces these tariffs.
Ottawa has reportedly drawn up a detailed retaliation plan, targeting US exports such as Florida orange juice—a move aimed at hurting key political constituencies.
Canada has a broader list of up to C$150 billion in US imports that could be subject to countermeasures.
Meanwhile, Mexico has warned that the tariffs could cost 400,000 American jobs, particularly in industries that rely on affordable Mexican imports.
Mexican President Claudia Sheinbaum has expressed skepticism over whether Trump will follow through with the tariffs, hinting that the move may be more of a political strategy than an economic necessity.
Trump’s use of emergency powers to enforce tariffs
To fast-track the tariffs, Trump is expected to invoke the International Emergency Economic Powers Act (IEEPA), a statute originally passed in 1977 and expanded after 9/11 to grant the president broad authority to impose economic sanctions.
This strategy would allow Trump to bypass lengthy investigations typically required under trade laws.
Trump’s top trade adviser, Peter Navarro, defended the tariffs, arguing that revenue from them could help fund an extension of Trump’s 2017 tax cuts, which are set to expire this year.
However, critics argue that the tariffs act as a tax on American consumers and businesses, as importers pass on the increased costs through higher prices.
Global trade tensions on the rise
Beyond North America, Trump has also floated a 10% tariff on Chinese imports, citing Beijing’s role in fentanyl trafficking as a justification.
While China has remained cautious about its response, its embassy in Washington has warned the US not to take its “goodwill for granted.”
If Trump enforces these tariffs, he risks igniting a fresh trade war that could have global repercussions.
During his first term, similar moves led to aggressive countermeasures from China and the European Union, affecting industries from agriculture to motorcycles.
Will Trump back down?
Despite the aggressive rhetoric, some analysts believe Trump may announce the tariffs but suspend their enforcement, using them as leverage in negotiations with Canada and Mexico.
However, others warn that repeated threats without action could weaken Trump’s credibility on trade enforcement.
With the stakes higher than ever, businesses and investors remain on edge, watching closely for Trump’s next move in what could become one of the most consequential trade battles of the year.
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