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By Adeola Adeosun
Weekend Night Editor
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President Donald Trump has signed an order seeking to impose significant tariffs on America's largest trading partners through the International Emergency Economic Powers Act (IEEPA).
Trump had repeatedly promised to impose tariffs on the United States' closest trading partners, citing concerns over fentanyl flow and trade deficits.
The order imposes 25 percent tariffs on Mexican and Canadian imports, a special 10 percent rate for Canadian energy products, and 10 percent tariffs on Chinese imports, set to take effect Tuesday.
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The White House indicates rates could increase if countries retaliate.
Why It Matters
Tariffs are taxes on imported goods, typically paid by the importing businesses, which can then pass costs onto consumers through higher prices.
In this case, the importing business would be any American company that purchases goods from foreign suppliers and brings them into the country for resale, manufacturing, or distribution.
Trump's new tariffs could significantly raise costs for products ranging from automobiles to fresh produce, which flow across North American borders daily.
The potential economic consequences extend beyond price hikes. Canadian Prime Minister Justin Trudeau has warned of difficult times ahead, while Mexico President Claudia Sheinbaum has emphasized ongoing dialogue but indicated Mexico has "Plan A, Plan B, Plan C for what the United States government decides."
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What To Know
The Trump administration justified the tariffs through IEEPA, citing national security concerns over illegal immigration and fentanyl trafficking.
The order includes an escalation mechanism if countries retaliate, eliminates the current $800 duty-free allowance for Canadian imports, and contains no exception process. The lower 10 percent rate on Canadian energy imports reflects efforts to minimize impacts on gasoline and utility prices.
What Is A Tariff?
When countries import goods, their governments often impose taxes called tariffs on these products.
These fees are typically paid by businesses bringing goods into the country, though the costs often reach consumers through higher prices. Tariffs serve multiple purposes: they can protect domestic industries, generate government revenue, or pressure other nations to change policies.
In today's global economy, most nations have moved away from heavy tariff use, preferring free trade agreements that reduce these barriers. However, governments may still implement tariffs for specific policy goals or in response to international disputes.
What People Are Saying
President Donald Trump on his Truth Social platform: "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 favor of it."
Mexico President Claudia Sheinbaum shared remarks during an event promoting a government housing program: "I'm calm... because I know that Mexico's economy is very powerful, very strong."
Sheinbaum later posted on X: "I instruct the Secretary of Economy to implement plan B that we have been working on, which includes tariff and non-tariff measures in defense of Mexico's interests."
William Reinsch, senior adviser at the Center for Strategic and International Studies and a former U.S. trade official said: "Historically, most of our tariffs on raw materials have been low because we want to get cheaper materials so our manufacturers will be competitive ... Now, what's he talking about? He's talking about tariffs on raw materials. I don't get the economics of it."
Reinsch added: "It doesn't make much economic sense."
Democratic Leader Chuck Schumer of New York posted on X: "You're worried about tomato prices. Wait till Trump's Mexico tariffs raise your tomato prices. … You're worried about car prices. Wait till Trump's Canada tariffs raise your car prices."
What Happens Next
The tariffs begin Tuesday, potentially triggering economic tensions across North America.
Trump has indicated plans for additional import taxes on various products, including computer chips, steel, and pharmaceutical drugs.
This article includes reporting from The Associated Press.
Update, 2/1/25 at 9:21 p.m. ET: This article has been updated with additional information.
Update, 2/1/25 at 8:08 p.m. ET: This article has been updated with additional information, context and quotes.
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