Trump Announces Tariffs on Canada and Mexico to Begin Next Month

Updated 10:00 AM EST, October 30, 2023

WASHINGTON (AP) — President Donald Trump stated on Monday that tariffs on goods from Canada and Mexico will come into effect next month. This decision marks the end of a month-long delay on these planned import taxes, which could negatively affect economic growth and lead to higher inflation.

During a press conference at the White House alongside French President Emmanuel Macron, Trump confirmed, “We’re on time with the tariffs, and it seems like that’s moving along very rapidly.” He was responding to questions concerning the tariffs that will impact America’s two largest trading partners while also indicating that additional “reciprocal” tariffs would be implemented as soon as April.

“The tariffs are going forward on time, on schedule,” Trump reiterated.

Trump has often claimed that other nations impose unfair import taxes that hurt domestic manufacturing and jobs. His repeated threats regarding tariffs have raised alarms among businesses and consumers about possible economic slowdowns and a rise in inflation. However, Trump argues that these import taxes will help bring in revenue to address the federal budget deficit and create new jobs for American workers.

“Our country will be extremely liquid and rich again,” Trump expressed.

In an interview with Fox News later on Monday, French President Macron mentioned he hoped to persuade Trump to avoid escalating into a trade war. Macron pointed out the challenges of adversarial relations with a traditional ally like Europe while simultaneously confronting China’s economic power.

“We don’t need a trade war,” Macron stated. “We need more prosperity together.”

Economists warn that the financial burden of these tariffs may largely fall on consumers, retailers, and manufacturing sectors, including auto companies that depend on global sourcing and materials like steel and aluminum, which already face a separate 25% tariff.

Mexican President Claudia Sheinbaum expressed optimism on Monday regarding her government's ability to reach agreements with the U.S. administration before Trump’s deadline. “We would need to be reaching important agreements this Friday,” Sheinbaum told reporters, indicating ongoing communications on various matters. She also highlighted Mexico's stance in high-level discussions by requesting the U.S. to address drug distribution issues domestically.

Concerns about market uncertainty have been voiced by corporations such as Walmart. The University of Michigan reported a nearly 10% drop in consumer sentiment over the past month, spurred by fears of increased tariffs and inflation. In the upcoming 2024 presidential elections, voters might lean towards Trump, believing he can help stabilize inflation that surged to a four-decade high during President Joe Biden’s administration.

Despite discussions with Canadian and Mexican officials, Trump indicated that the 30-day suspension of the tariffs set to begin in February would come to an end. He plans to impose a 25% tariff on Mexican imports and tax most goods from Canada at 10%, with certain energy products enjoying a lower tariff rate of 10%.

The administration aims to use these tariffs as leverage to prompt Canada and Mexico to take stronger actions against illegal immigration and the trafficking of drugs like fentanyl, albeit little of which originates from Canada. Canada has responded by appointing a czar to handle its drug issue, while Mexico has stationed an additional 10,000 National Guard members at the U.S. border.

New tariffs, set to also begin in April, are expected as a potential counterbalance to foreign countries' rates. These tariffs could be influenced by subsidies, regulatory barriers, and value-added taxes levied by other nations.

The risk of retaliatory tariffs from Canada, Mexico, and Europe poses a threat to broader trade relationships, further complicating economic growth. A Yale University report estimated that tariffs could reduce average U.S. incomes by $1,170 to $1,245 annually.

tariffs, economy, trade