White House press secretary Karoline Leavitt confirmed President Donald Trump will impose 25% tariffs on items imported from Canada and Mexico and a 10% tariff on Chinese imports starting Saturday, likely raising prices for consumers.
President Trump cited three reasons for the tariffs: illegal immigration, drugs crossing the borders, and trade deficits.
"I'll be putting a tariff of 25% on Canada and separately 25% on Mexico, and we will really have to do that because we have very big deficits with those countries," he said.
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President Trump's commerce secretary nominee, Howard Lutnick, said at his Senate confirmation hearing on Wednesday that he prefers an "across-the-board" tariff on items.
"Our farmers, our ranchers, and our fishermen are treated with disrespect," he said. "The countries take advantage of American kindness, American gratitude that we used to rebuild the world after the World Wars, and after the Korean War and the Vietnam War. We need that disrespect to end."
What are tariffs?
They are a fee charged for companies to import their goods from another country. Many economists believe that most companies would pass the cost of a tariff to the consumer instead of absorbing the fee
What impact could tariffs have
China, Mexico and Canada are the United States' three largest trading partners, so their potential impacts could be widely felt.
According to research released in October 2024 by Georgia State University, Arizona State University, and Colorado State University, tariffs might not only cause an increase in prices for consumers, but they can also disrupt supply chains.
"While tariffs can provide some protection to certain industries, they can also create inefficiencies for the industries they were designed to protect, as well as for their supply chain partners," the study said.
The disruption to the supply chain could cause additional challenges to the economy.
"These findings demonstrate the ripple effect of unintended consequences that tariffs can lead to throughout supply chains, motivating further theoretical development and informing trade policy," the study said.
According to the Observatory of Economic Complexity, Mexico exports over $421 billion in goods to the U.S. annually. Mexico’s next largest global trading partner is Canada, as it exports over $22 billion in goods there.
Mexico exports $36.8 billion in computers to the U.S., while exporting $34.1 billion in cars. The U.S. also gets about $31.8 billion in car parts from Mexico.
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The U.S. exports $294 billion to Mexico annually, the OEC reports.
Canada exports $438 billion in goods to the U.S. yearly. Its next largest trade partner is China, at $25.4 billion. About 36% of what the U.S. imports from Canada is oil and gas products. The U.S. also takes in about $27 billion a year in cars from Canada.
Motor vehicle parts, raw medals and wood are also major imports the U.S. gets from Canada.
The U.S. sends about $308 billion in exports to Canada.
China sends $501 billion in goods to the U.S., while the U.S. exports $151 billion to China.
