Trump declares national economic emergency to impose tariffs on Canada, Mexico, China
New Delhi, Feb 2: U.S President Donald Trump has announced sweeping new tariffs on two of its neighbouring countries, Mexico, Canada, and China, a move that risks igniting a global trade war and sending shockwaves through multiple economies.
As CNN reports, the tariffs were signed into effect at Trump’s Mar-a-Lago club on Saturday, with the administration justifying them as a measure to curb the flow of drugs and undocumented immigrants into the United States.
Experts and observers warned that the policy could raise prices for American consumers across a range of essential goods, from avocados to automobiles.
In swift retaliation, Mexican President Claudia Sheinbaum declared that Mexico would impose its own countermeasures, while Canadian Prime Minister Justin Trudeau announced "far-reaching" retaliatory levies.
According to CNN, the trade conflict threatens to upend years of virtually duty-free commerce among North American nations and escalate tensions between the U.S. and China, which have endured years of tariff battles.
Under the new tariffs, the U.S. will impose a 25% duty on all Mexican imports and most Canadian goods, while Chinese imports will face a 10% levy.
Notably, Canadian energy products will be subjected to a lower 10% tariff, a concession acknowledging America’s reliance on Canadian oil, electricity, and natural gas.
Trump’s executive order also closes the de minimis loophole, which had allowed tax-free shipments of goods under $800—a mechanism widely used by American small businesses and Chinese companies. Trump officials argue that closing this loophole will help customs authorities inspect shipments more effectively.
Although the administration frames the tariffs as a crackdown on fentanyl trafficking and undocumented immigration, CNN notes that officials failed to provide clear benchmarks for when these levies might be lifted. Instead, the order contains a clause allowing for the expansion of tariffs should any targeted country impose retaliatory measures against the U.S.
To enforce the tariffs, Trump declared a national economic emergency under the International Emergency Economic Powers Act (IEEPA), a rarely invoked statute granting the president broad authority over trade during crises. As CNN highlights, the move marks an aggressive expansion of executive power in economic policymaking. The tariffs are scheduled to take effect at midnight, Easter Time in the US, on Tuesday.
Announcing the move on Truth Social, Trump asserted: "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."
The move is expected to have major economic repercussions leading to higher consumer prices, disrupted supply chains, and potential job losses.
A Trump administration official, speaking to media on Saturday, warned that any retaliatory action from Mexico, China, or Canada could trigger even steeper U.S. tariffs.
Trump himself acknowledged possible short-term hardships. "There could be some temporary, short-term disruption, and people will understand that," he told reporters on Friday. "But the tariffs are going to make us very rich and very strong—and we’re going to treat other countries very fairly."
Following Trump’s announcement, Trudeau responded with a decisive countermeasure, slapping a 25% tariff on U.S. goods valued at $155 billion.
"This will include immediate tariffs on $30 billion worth of goods as of Tuesday, followed by further tariffs on $125 billion of American products in 21 days’ time, to allow Canadian companies and supply chains to seek to find alternatives," Trudeau stated in a Saturday night press conference. The targeted goods include American alcohol, produce, clothing, shoes, household appliances, lumber, and other key materials.
Mexico’s response was similarly defiant.
Speaking in Chicoloapan de Juárez, Sheinbaum declared, "When we negotiate with other nations, we always do so with our heads held high, never bowing."
Later on X, she ordered Mexico’s Secretary of Economy to implement "Plan B," a package of retaliatory tariff and non-tariff measures to protect the nation’s interests. The specifics of Mexico’s countermeasures remain unclear, CNN reports.
Further escalating tensions, a White House fact sheet accused Mexican drug cartels of having an "intolerable alliance" with the country’s government, labeling Mexico a "safe haven" for traffickers. Sheinbaum strongly rebuffed the allegations, dismissing them as "slanderous."
Trump has long championed tariffs as a cornerstone of his economic strategy, a rare through-line from his days as a New York real estate developer to his time in public office.
CNN notes that, as a candidate, Trump frequently touted tariffs as "the most beautiful word in the dictionary," portraying them as a tool to bolster U.S. leverage on the global stage.
The three nations targeted by Trump’s latest move—Mexico, China, and Canada—are the United States' largest trading partners, CNN reported.
Mexico, which overtook China as America’s top source of imported goods in 2023, maintained that position last year, exporting $467 billion worth of goods to the U.S., followed by China’s $401 billion and Canada’s $377 billion, according to Commerce Department data.
Collectively, these countries accounted for 42% of America’s nearly $3 trillion in imports last year. Meanwhile, U.S. exports to these nations totaled over $762 billion, accounting for more than 40% of total outbound American goods.
With tariffs set to take effect imminently, trade experts warn of widespread economic ramifications. As the conflict escalates, the global markets—and everyday consumers—will be watching closely on Monday, the trading day.