President Donald Trump announced that he will hold discussions with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum on Monday, just a day before new 25% tariffs on imports from both nations take effect. Trump’s decision to impose these tariffs has already triggered strong responses, with Canada implementing retaliatory tariffs and Mexico considering similar measures.
Canada and Mexico Push Back Against Tariffs
In response to Trump’s Saturday order, Canada swiftly imposed its own 25% tariffs on American goods. Trudeau condemned the move, stating that Canada would not hesitate to protect its economic interests. Meanwhile, Sheinbaum indicated that Mexico was exploring both tariff and non-tariff countermeasures to safeguard its trade relations with the US.
Trump justified the tariffs as a measure to curb illegal migration and the influx of fentanyl across the borders. He also emphasized the need to reduce trade deficits, stating, “They owe us a lot of money, and I’m sure they’re going to pay.” According to the Office of the US Trade Representative, the US had an $80.1 billion goods trade deficit with Canada in 2022, a significant 68% increase from 2021. The deficit with Mexico stood at $131.1 billion, marking a 24% rise over the same period.
While the general tariff rate stands at 25%, the Trump administration has set a lower 10% tariff for Canadian energy exports, including oil and natural gas. Additionally, the president has imposed a separate 10% tariff on Chinese goods, set to take effect on Tuesday. These measures reflect Trump’s broader trade strategy of using tariffs to increase tax revenue, protect jobs, and leverage negotiations with foreign governments.
Trade War Fallout
Trudeau, speaking at a news briefing on Saturday, confirmed that he had not spoken with Trump since his inauguration. Meanwhile, Trump acknowledged that Americans might experience “short-term pain” due to the escalating trade war but insisted that the long-term benefits would outweigh the temporary setbacks. “The United States has been ripped off by virtually every country in the world,” he said. “We’re going to change it. It’s been unfair.”
With talks scheduled just hours before the tariffs take effect, the outcome remains uncertain. While Canada and Mexico are expected to push for exemptions or modifications, Trump’s firm stance suggests that a full-scale trade war could be on the horizon. Markets and businesses across North America will be closely monitoring the discussions for any potential breakthroughs or further escalation.