Over the past weeks, President Trump has been targeting major U.S. trading partners, specifically China, Canada, and Mexico with severe tariffs—citing concerns over trade imbalances, national security, and the smuggling of illegal fentanyl. These measures have sparked significant economic and diplomatic reactions, reshaping international trade dynamics and causing many companies to embrace a wait and see approach.

Tariffs on China

On February 1, 2025, President Trump signed an executive order imposing a 10% tariff on all Chinese imports, effective February 4. This decision aimed to address longstanding issues related to trade deficits and allegations of unfair trade practices by China. In retaliation, China announced tariffs ranging from 10% to 15% on U.S. agricultural exports and filed complaints with the World Trade Organization. These actions have escalated tensions between the two economic giants, raising concerns about a prolonged trade war.​

As of last week that tariff has increased to 20% and started on March 4th.

Tariffs on Canada and Mexico

Simultaneously, the U.S. administration announced a 25% tariff on all goods imported from Canada and Mexico, with a reduced rate of 10% specifically for Canadian energy exports, including oil and natural gas. These tariffs were initially set to take effect on February 4, 2025. The rationale behind these measures included addressing trade imbalances and pressuring both nations to enhance their efforts in curbing the trafficking of drugs, particularly fentanyl, into the United States. ​

Postponement and Diplomatic Negotiations

Facing immediate backlash, President Trump agreed to a one-month postponement of the tariffs on Canada and Mexico after negotiations with their leaders. As part of the agreement, Mexico committed to deploying 10,000 troops to its northern border to enhance security, while Canada appointed a “fentanyl czar” to intensify efforts against drug trafficking. In return, the U.S. delayed the implementation of the tariffs until March 4, 2025.
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Implementation and Economic Impact

Despite diplomatic efforts, the tariffs on Canada and Mexico were implemented as scheduled on March 4, 2025, though this wouldn’t last long. Canada responded by imposing 25% tariffs on $30 billion worth of U.S. goods, with plans to expand them if the U.S. tariffs remained in place. Mexico also announced intentions to implement retaliatory tariffs, further escalating trade tensions in North America. ​

Current Status and Future Outlook

As of March 7, 2025, President Trump has announced a one-month delay on certain tariffs affecting imports from Mexico and Canada, particularly those covered under the United States-Mexico-Canada Agreement (USMCA). This postponement, now extending to April 2, 2025, aims to provide additional time for negotiations and to mitigate immediate economic disruptions.

It seems that the President is using tariffs as a tool to play hardball negotiation. Hopefully a resolution and deal that benefits all sides will be reached soon so that free flowing trade can resume.

For more updates, stay tuned to our blog posts.