Trump Set to Unleash First of Many Tariffs Promised Globally
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President Donald Trump is preparing to fire the first salvo of his tariff war and can hardly wait to preview the next one.
Trump is set to formally announce general tariffs of 25% on Canada and Mexico, and 10% on China, on Saturday at Mar-a-Lago, his Florida estate. The countries are the largest three sources of US imports, accounting for almost half of total volume.
Trump has long threatened the tariffs, though teased the possibility of reprieve if Mexico and Canada took steps to control the flow of migrants and illegal drugs across their borders. Both did, but it wasn’t enough. Trump said flatly this week he’d proceed, and said Friday there was nothing the countries could do to stop him.
US officials informed Canada on Saturday that the tariffs would be implemented on their goods on Tuesday, according to people familiar with the situation. Prime Minister Justin Trudeau is expected to speak on the tariffs after they are implemented on Saturday.
The Trump administration has regularly warned Canada that any retaliatory tariffs would lead the US to escalate its own measures — raising the prospect of a spiraling trade war, according to an official familiar with the situation.
The US has not formally notified Mexico about the date tariffs would start, according to a person with direct knowledge of the discussions. President Claudia Sheinbaum and top government officials met on Saturday morning with private-sector representatives to discuss plans ahead of possible tariffs. Economy Minister Marcelo Ebrard said the companies pledged to work with Mexico in the face of arbitrary trade measures, according to a post on X.
Trump is no stranger to tariffs though his admiration for them has reached new heights. He’s threatened to raise the Canada, Mexico and China tariffs further, promised similar levies on the European Union — “absolutely,” he said Friday — and vowed additional sectoral tariffs on steel, aluminum, copper, semiconductors and pharmaceutical drugs. He’s also weighed an across-the-board global tariff and mused about raising $1 trillion in annual new tariff revenue.
The moves will test so many barriers — the limits of his honeymoon period in his second term in the White House; of the US economy and its fledgling victory over inflation; of American consumers’ appetite to swallow fresh price increases; of the patience of allies. Tariffs are paid by American importers and borne by consumers, though offset potentially by price reductions abroad.
But, for Trump, they’re a philosophy, with him yearning for an era a century ago when US coffers were funded by tariffs and not income taxes, saying his measures will reinvigorate industry.
“The way you bring it back to the country is by putting up a wall. And the wall is a tariff wall,” he said. “The tariffs are going to make us very rich and very strong.”
The non-partisan Congressional Budget Office has put the cost of extending the 2017 tax cuts — Trump’s top legislative priority — at $4.6 trillion over 10 years. A 25% tariff on the more than $900 billion in annual imports from Canada and Mexico would raise roughly $225 billion annually or $2.3 trillion over 10 years if the tariffs had no impacts on trade, which many economists see as unlikely.
Barring a surprise last-minute reversal, he said Friday he’ll impose the tariffs on Canada and Mexico at 25%, while reducing the levy on imports of Canadian oil to 10%. The Canadians were informed that the 10% rate applied to “energy.”
China’s overall new tariff will be 10%.
The move against Canada and Mexico is a signal that no country is safe from his push to reshape global trade. The countries are the top buyers of US goods and have a continental free trade pact signed by Trump himself. The tariffs fly in the face of that.
They’ve pledged a response. Canada is promising retaliatory tariffs of its own, and even weighed an export tax on oil to undercut Trump’s ability to exclude gasoline price hikes from his tariff fight. Mexico’s president has hinted her country could respond with a retaliatory tariff, but never gave details about the possible plan. Both Canada and Mexico are still pressing to avoid implementation of the tariffs altogether; Trump, asked Friday if there’s anything they can do, said, “no, nothing.”
Trump also said Friday that he’d announce, in the next month or so, new tariffs on steel and aluminum, which he applied levies to in his first term. He didn’t specify the new level but said it would be lucrative for the government. He also said he’d impose a tariff on copper, offering no details but saying it would take longer than steel and aluminum.
He said he’d tariff semiconductor chips — repeating that vow after his meeting Friday with Nvidia Corp. Chief Executive Officer Jensen Huang. He’s also pledged a tariff on pharmaceutical drugs, without specifying which, at what level or when it would take effect.
The Association for Accessible Medicines industry group, in a statement by Chief Executive Officer John Murphy III, sounded the alarm earlier this week about the “devastating impact tariffs on generic and biosimilar supply chains would have on American patients and the US healthcare security in general.”
The final details of Trump’s first tranche of tariffs aren’t entirely clear. It doesn’t appear there will be exemptions, though companies and industries are sure to seek them. He said the various tariffs would stack upon one another — meaning, for instance, that a Mexican steel company might pay more than a firm there that produced a different product.
The fight is occurring against the backdrop of talks among Republicans for tax reform bills, which they’re aiming to pass in one or two bills without Democratic votes. A key pillar of that effort is extending expiring tax cuts and enacting new ones that Trump has promised, both of which will expand the already significant budget deficit.
Peter Navarro, a Trump trade adviser, told CNBC on Friday that the tariff effort can replace the revenue of tax cuts.
“Tariffs can easily pay for that,” Navarro said. “President Trump wants to move from the world of income taxes and countless IRS agents to the world where tariffs, like in the age of McKinley, will pay for a lot of government that we need to pay for and lower our taxes.”
--With assistance from Raeedah Wahid, Maya Averbuch, Shawn Donnan, Brian Platt and Alex Vasquez.
(Updates with Canada, Mexico notifications, plans beginning in 4th paragraph)
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