President Donald Trump has imposed a 25% tariff on all US imports from Mexico and Canada, and 10% on Chinese imports, citing the failure of the first two countries to stem the flow of illegal immigrants and the complicity of all three countries in the smuggling of fentanyl into the US.
In what analysts see as the opening of a broader trade war, the tariffs take effect on Tuesday, February 4. Canadian energy products face a reduced 10% tariff.
Following Trump’s executive orders on Saturday evening, Mexico, Canada, and China immediately announced retaliatory tariffs. Trump threatened further increases in response to these countermeasures.
US economists warned of inflation risks, particularly given North America’s integrated economy under part of a free trade pact between US, Canada and Mexico, that was signed, ironically, under Trump in his first term. Industry associations across sectors strongly opposed the decision.
While the China tariffs were short of Trump’s campaign threat of 60%, their comprehensive nature—covering all imports rather than specific sectors—is striking. Trump’s use of tariffs to address non-economic issues signals his willingness to leverage trade policy across multiple domains.
After signing the executive orders, Trump posted on Truth Social: “Today, I have implemented a 25% Tariff on Imports from Mexico and Canada (10% on Canadian Energy), and a 10% additional Tariff on China. 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. We need to protect Americans, and it is my duty as President to ensure the safety of all. I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favor of it.”
{{/usCountry}}After signing the executive orders, Trump posted on Truth Social: “Today, I have implemented a 25% Tariff on Imports from Mexico and Canada (10% on Canadian Energy), and a 10% additional Tariff on China. 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. We need to protect Americans, and it is my duty as President to ensure the safety of all. I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favor of it.”
{{/usCountry}}The Mexico tariffs
In the Mexico order—affecting America’s largest trading partner—Trump cited a “sustained influx of illegal aliens and illicit opioids” as threatening American society.
The order accused Mexican drug trafficking organisations (DTOs), also referred to as cartels, of leading fentanyl and other drug trafficking operations, alleging an “intolerable alliance” involving the Mexican government. “The government of Mexico has afforded safe havens for the cartels to engage in the manufacturing and transportation of illicit drugs, which collectively have led to the overdose deaths of hundreds of thousands of American victims,” the order alleged.
Trump expanded his Day 1 national emergency declaration to address Mexico’s alleged failure to combat DTOs and trafficking, declaring it an “unusual and extraordinary threat” warranting the 25% duty.
Mexico’s president Claudia Sheinbaum responded on X, ordering her economy minister to implement “Plan B” with tariff and non-tariff countermeasures. She rejected accusations of government-cartel collaboration. In 2023, US-Mexico trade amounted to $475 million in imports to US and $322 billion in exports.
The Canada tariffs
In the order imposing additional tariffs on Canada, Trump said the northern border was not exempt from these issues. It cited criminal networks involved in human trafficking and Mexican cartels operating fentanyl and nitazene labs in Canada. “The amount of fentanyl that crossed the northern border last year could kill 9.5 million Americans,” the order stated.
Using similar language to the Mexico order, Trump said that he had the duty to defend the nation — “I will not stand by and allow our sovereignty to be eroded, our laws to be trampled, our citizens to be endangered, or our borders to be disrespected anymore” — as he expanded the national emergency to address Canada’s “failure to do more” against trafficking, declaring it an “unusual and extraordinary threat.” The order imposed 25% duties on Canadian products, except for energy resources at 10%.
Soon after, Canadian PM Justin Trudeau announced 25% retaliatory tariffs on $107 billion of US goods, including beer, wine, bourbon, fruits, clothes, and household appliances. He warned US citizens: “Tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities. They will raise costs for you, including food at the grocery store and gas at the pump.” Trudeau emphasised US-Canada historical ties: “From the beaches of Normandy to the mountains of the Korean Peninsula, from the fields of Flanders to the streets of Kandahar, we have fought and died alongside you during your darkest hours. We didn’t ask for this but we will not back down.”
In a sign of the bipartisan consensus on the issue, Canada’s opposition leader and the man widely expected to be the next PM, Pierre Poilievre, said on X that it was time to put “Canada First” and called for dollar-for-dollar retaliation. In 2023, US trade with Canada reached $418 billion in imports and $354 billion in exports.
The China tariffs
The China order cited the “sustained influx of synthetic opioids” killing 200 Americans a day, ravaging families and straining the health system. Trump claimed that since his first term, the Chinese Communist Party had incentivised companies to export fentanyl precursors for illegal US sales.
The executive order accused China of backing and harbouring criminal organisations that launder drug revenues and use Chinese software applications. It alleged that Chinese companies deliberately concealed illicit substances within legitimate commerce.
“The PRC implements the most sophisticated domestic surveillance network coupled with the most comprehensive domestic law enforcement apparatus in the world. The PRC also routinely exerts extraterritorial reach across the globe to threaten, harass, and suppress what it views as political dissent. As such, the CCP does not lack the capacity to severely blunt the global illicit opioid epidemic; it simply is unwilling to do so.”
Trump, in the order, thus declared China’s inaction an “unusual and extraordinary threat” and imposed 10% additional duties on Chinese goods.
China’s commerce ministry called the move a violation of international trade rules, promising WTO challenges and countermeasures. The foreign ministry emphasised previous US-China anti-drug cooperation successes. In 2023, US’ trade with China was marked by $427 billion in imports and $177 billion in exports.
Widespread criticism
The US Chamber of Commerce opposed the tariffs, stating they “won’t solve these problems, and will only raise prices for American families and upend supply chains.”
The Wall Street Journal’s editorial, “The Dumbest Trade War in History,” highlighted the integrated North American auto industry, where vehicles cross borders multiple times during production. The Journal warned that undermining treaty obligations would discourage future trade deals, concluding that a persistent North American trade war “will qualify as one of the dumbest in history.”