Trump Signs Orders Imposing Tariffs on Canada, Mexico and China

President Trump on Saturday followed through with his threat to impose stiff tariffs on Mexico, Canada and China, setting the stage for a destabilizing trade war with the United States’ largest trading partners.Mr. Trump hit Canada and Mexico with tariffs of 25 percent on all goods, with a carve out for Canadian energy and oil exports. Those will be taxed at 10 percent. Mr. Trump also placed a 10 percent tariff on Chinese goods. The levies go into effect just after midnight on Tuesday, and will be added on top of existing tariffs.The president said he was imposing the tariffs until the flow of migrants and illegal fentanyl into the United States was alleviated. But his administration did little to explain what further steps were needed to remove the tariffs. Mexico and Canada have both adopted measures to curb illegal border crossings. Such crossings at the U.S.-Mexico border are at their lowest level since 2020, though still higher than during much of Mr. Trump’s first term.Mexico has also stepped up efforts to stymie the smuggling of fentanyl into the United States, including making its largest-ever seizure of fentanyl doses in December. Canada has deployed more drones, helicopters and enforcement officers to better secure the border.It’s not clear what additional steps the Chinese government has recently taken, if any, beyond its previous law enforcement collaboration with the United States on the fentanyl trade. Mr. Trump discussed fentanyl with President Xi Jinping of China in a phone call during his first week in office.Mr. Trump’s weeks of threats to impose tariffs have given Canada, Mexico and China plenty of time to think about ways to retaliate with tariffs of their own. Canada has indicated it will tax Florida orange juice, Tennessee whiskey and Kentucky peanut butter. The decision to hit those products, at least initially, is strategic: They come from states with Republican senators and with voters who elected Mr. Trump in 2024.But Mr. Trump’s executive orders contained a clause aimed at discouraging governments from fighting back. If Mexico, Canada or China retaliates with their own levies, the orders state that the United States could answer with even higher levies.And unlike in Mr. Trump’s first term, when American companies that import goods could seek exemptions to the tariffs, a White House official said that no similar process would be set up this time around.Asked what the countries could do to have the tariffs removed, the official said the most important metric would be whether Americans continued to die from fentanyl overdoses, as well as how much fentanyl is recovered at the border. The Trump administration has said synthetic drugs were killing approximately two hundred Americans per day, putting a strain on communities and the health care system.The executive orders were issued under a decades-old law called the International Emergency Economic Powers Act, and they expand the scope of a national emergency that Mr. Trump declared with respect to “influx of illegal aliens and illicit drugs” on his first day in office. The tariffs will raise the cost of doing business with the United States’ three largest trading partners. Canada, Mexico and China account for more than a third of U.S. imports, providing cars, medicine, shoes, timber, electronics, steel and many other products to American consumers. Mr. Trump and other White House officials have deflected the criticism that the tariffs will add to inflation.While Mr. Trump’s announcement was signaled in advance, it came before he held any of type of serious negotiations with leaders of the three countries. President Claudia Sheinbaum of Mexico emphasized on Friday that her country should proceed with a “cool head” and a plan to retaliate. Canada’s prime minister, Justin Trudeau, said on Friday that his nation was prepared to respond if Mr. Trump took action.Some business owners praised Mr. Trump’s decision for the impact it could have on U.S. manufacturers.Zach Mottl, the president of Atlas Tool Works, a metal manufacturer near Chicago, called the tariffs “a bold and necessary step toward reversing decades of failed trade policies and rebuilding America’s manufacturing and agricultural industries.”Mr. Mottl, who is also the chairman of Coalition for a Prosperous America, a group that supports tariffs, said in an interview that his factory had struggled, and that he had seen many suppliers and customers go out of business in recent decades from foreign competition.“A universal tariff is a great way to generate revenue and to kick-start job growth in America,” he said.But others said the tariffs could be harmful for many companies that depend on international supply chains. Industry groups representing companies making petroleum, cars, consumer care products, tequila, steel and other products issued statements expressing concern or outrage.John G. Murphy, a senior vice president at the U.S. Chamber of Commerce, said that the tariffs would cause “severe harm to many U.S. manufacturers” and were “a recipe for decline.”Many imports are materials, inputs and equipment used by U.S. manufacturers that often are not available from U.S. sources, Mr. Murphy said.Democrats were also quick to criticize the tariffs and warn that they would fuel inflation. “Donald Trump is aiming his new tariffs at Mexico, Canada, and China but they will likely hit Americans in their wallets,” said Senator Chuck Schumer, the Democratic leader. “I am concerned these new tariffs will further drive up costs for American consumers.”Additional costs for energy could be particularly disruptive to the U.S. economy, which is likely why the Trump administration chose to tax Canadian energy products at 10 percent, compared to 25 percent for other goods. Tariffs also could cause prices at the pump to rise modestly, particularly in the Midwest where refineries turn a lot of Canadian oil into fuels like gasoline and diesel.The United States is the largest oil producer in the world, but roughly 40 percent of the crude oil it refines comes from other countries, according to the American Fuel & Petrochemical Manufacturers, an industry trade association. Canada is the top source of imported oil by far, followed by Mexico.The United States-Mexico-Canada trade agreement, which Mr. Trump signed in his first term, does provide an exception for governments to act to address issues of national security. The Trump administration could claim that the border issue is one. But legal experts have speculated that the Trump administration’s use of the International Economic Emergency Powers Act, or IEEPA, to impose such sweeping tariffs could invite court challenges in the months to come. The tariffs could hit particularly hard given that the U.S., Canadian and Mexican economies are now highly integrated, after more than 30 years under free-trade agreements.Supply chains producing cars, clothing, packaged food and other goods have been built to snake back and forth across North America’s borders. And many goods produced in factories in Canada and Mexico are made with parts or raw materials from the United States, compounding the potential for tariffs to negatively affect the U.S. economy.In a government filing last year, for example, a trade group that represents General Motors, Ford and Stellantis said that on average, 50 percent of the content of a vehicle built in Canada came from the United States. For Mexico, the proportion was 35 percent, it said.Importers bringing goods into the country from Canada, Mexico and China will immediately be subject to the additional cost of a tariff. They will have to choose whether to pass those costs on to American consumers in the form of higher prices.Many economists expect them to do so, at least in part. That could be particularly painful for Americans, at a time when many are already concerned about the cost of groceries, gasoline and other goods.James Knightley, the chief international economist at ING, warned that consumers on the lower-end of the income spectrum would face the biggest burden from higher tariffs. That is because those households tend to spend more of their income on physical goods relative to higher-income households, which disproportionately spend more on services and experiences.Assuming that Americans do not substitute higher-priced items and that consumers bear the cost entirely, Mr. Knightley said, the tariffs would translate to a $835 hit per person in the United States, or $3,342 for a family of four. Working families, he said, look “particularly vulnerable.”Beyond the cost to households, economists also worry about broader effects on economic growth, warning that trade tensions will probably lead to less investment and more subdued business activity.Researchers at the Peterson Institute for International Economics in Washington estimate that a 25 percent tariff on all exports from Mexico and Canada would hit those countries the hardest, but would slow economic growth and accelerate inflation in all three countries.Mr. Trump has not been persuaded by those arguments. He has long boasted of the value of tariffs as a way to generate revenue, boost U.S. manufacturing and cow foreign governments into action. Speaking to reporters from the Oval Office on Friday, Mr. Trump suggested this was just the beginning of his trade war.The president said he would also “absolutely” impose tariffs on the European Union, saying that it had “treated us so terribly.” He added that the United States would eventually put tariffs on chips, oil and gas — “I think around the 18th of February,” he said — as well as later levies on steel, aluminum and copper.Mr. Trump’s top economic advisers, as well as his newly appointed Treasury secretary, Scott Bessent, and his choice for commerce secretary, Howard Lutnick, have pushed back on the idea that U.S. consumers will suffer as a result of tariffs.Speaking before the Senate in a confirmation hearing last week, Mr. Lutnick maintained that a particular product’s price might go up but that the notion of tariffs causing broader inflation was “nonsense.”“The economy of the United States of America will be much, much better,” he said.Matina Stevis-Gridneff, Simon Romero, Colby Smith, Rebecca F. Elliott, Vjosa Isai and Emiliano Rodríguez Mega contributed reporting.