On 1st February, the President of the United States, Donald Trump, imposed new tariffs on imports from Canada, Mexico, and China. He cited national security concerns stemming from illegal immigration and drug trafficking, particularly fentanyl, as the reason. The executive order signed by President Trump in this regard enforced a 25% tariff on imports from Canada and Mexico, while Chinese goods will face a 10% tariff. Canadian energy imports, including oil, natural gas, and electricity, will be subjected to a 10% tariff.
In a statement on Truth Social, President Trump said, “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. I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favour of it.”
Reasons behind the tariffs
According to the fact sheet issued by the White House in this regard, the tariffs are necessary to hold these countries accountable for failing to prevent the flow of illegal immigrants and narcotics into the US. The Trump administration accused China of not taking adequate measures to curb the export of precursor chemicals used in the production of fentanyl, a potent synthetic opioid that contributes to tens of thousands of overdose deaths in the US every year. Furthermore, the Trump administration criticised Chinese authorities for allegedly allowing transnational criminal organisations to engage in money laundering activities that back the drug trafficking networks in the country.
Mexico is facing similar accusations. The US government has alleged that the Mexican government provides safe havens for powerful drug cartels that are involved in the manufacturing and transportation of dangerous narcotics, including fentanyl. The White House noted in the fact sheet that these cartels have developed an “intolerable alliance” with Mexican officials, which has pushed the drug crisis further in the US, posing a direct threat to national security.
The Trump administration also highlighted the increasing presence of Mexican drug trafficking organisations operating fentanyl synthesis labs in Canada. According to the US government, this has contributed to the spike in domestic fentanyl production within Canadian borders.
The US government justified these tariffs by stating that previous US governments failed to use economic leverage effectively to address these issues. The Trump administration said that unrestricted access to the US market is a privilege and leveraging tariffs is a powerful tool to compel foreign governments to take stronger action against illegal immigration and drug trafficking.
Understanding tariffs and their implications
Tariffs are basically taxes on imported goods. They are aimed at regulating international trade and protecting domestic industries from foreign competition. According to a report in CBS, US businesses importing goods pay these tariffs to US Customs and Border Protection. The collected funds are deposited into the General Fund. Though the Trump administration claims that foreign countries bear the cost, the actual burden is imposed on American consumers, who feel the impact as businesses are forced to increase the prices of products.
There are different types of tariffs. The first one is ad valorem tariffs, like the 25% levy on Canadian and Mexican imports, which are a percentage of the product’s value. Specific tariffs charge a fixed amount per unit, while tariff-rate quotas impose higher duties once certain import thresholds are met.
The Trump administration has argued that tariffs protect US manufacturers and encourage domestic production. However, some experts believe that such tariffs can potentially lead to an increase in consumer prices and inflation. Capital Economics predicts that these tariffs could raise the effective US tariff rate from 2.4% to 31%, potentially pushing inflation from 2.9% to 4%.
Reactions from Canada and Mexico
Both Canada and Mexico have strongly condemned the tariffs imposed. Canadian Prime Minister Justin Trudeau warned of “real consequences for people and workers on both sides of our border,” stressing that Canada did not seek this conflict but is prepared to respond firmly. In a statement on X, he said that he had consulted Canadian premiers and plans to speak with Mexican President Claudia Sheinbaum to coordinate their response.
The United States has confirmed that it intends to impose 25% tariffs on most Canadian goods, with 10% tariffs on energy, starting February 4.
— Justin Trudeau (@JustinTrudeau) February 2, 2025
I’ve met with the Premiers and our Cabinet today, and I’ll be speaking with President Sheinbaum of Mexico shortly.
We did…
Mexico has announced retaliatory tariffs against the US. President Claudia Sheinbaum Pardo dismissed the White House’s accusations of alliances with criminal organisations as slander and emphasised that issues should be resolved through dialogue, not tariffs. She instructed Mexico’s Secretary of Economy to implement ‘Plan B’, involving both tariff and non-tariff measures to protect Mexico’s interests.
In a long post on X, she wrote, “We categorically reject the White House’s slander against the Mexican government of having alliances with criminal organisations, as well as any intention of interference in our territory. If such alliances exist, they are in US gun shops selling high-powered weapons to these groups, as proven by the US Department of Justice.”
Rechazamos categóricamente la calumnia que hace la Casa Blanca al Gobierno de México de tener alianzas con organizaciones criminales, así como cualquier intención injerencista en nuestro territorio.
— Claudia Sheinbaum Pardo (@Claudiashein) February 2, 2025
Si en algún lugar existe tal alianza es en las armerías de los Estados Unidos…
She added, “Our government has seized over 40 tonnes of drugs and detained more than 10,000 people linked to these groups in four months. The US should address its fentanyl crisis by tackling street sales and money laundering, rather than imposing tariffs. We propose a joint task force under mutual respect and shared responsibility principles. Coordination, yes; subordination, no.”
