Trump’s Latest Tariff Move on Mexico and Canada. Import Taxes Back on Track Hinting At A Full Blown Trade War!

After putting import taxes on hold for a month, President Donald Trump announced Monday that tariffs on Canada and Mexico will officially kick in next month. The decision could put a strain on economic growth and push inflation even higher.

Speaking at a White House press conference alongside French President Emmanuel Macron, Trump said, “We’re on time with the tariffs, and it seems like that’s moving along very rapidly.” While addressing a direct question about tariffs on the U.S.’s two biggest trading partners, he also emphasized that his broader plan for “reciprocal” tariffs was still set to roll out in April.

Trump has long argued that other countries impose unfair import taxes, hurting American manufacturers and workers. His repeated tariff threats have already caused jitters among businesses and consumers, raising fears of an economic slowdown and rising prices. Still, he insists that the new import taxes will bring in revenue to shrink the federal budget deficit and create jobs.

Macron, however, has been pushing back. In an interview late Monday, he said he hoped he had persuaded Trump to reconsider, warning against the risks of a trade war—especially with traditional allies. “We don’t need a trade war,” Macron said. “We need more prosperity together.”

Economists largely agree that these tariffs will ultimately hit consumers, retailers, and manufacturers the hardest—especially industries that rely on globally sourced raw materials like steel and aluminum, which are already facing a separate 25% tariff.

Despite the growing concerns, Mexican President Claudia Sheinbaum remained optimistic that her government could work out a deal with the U.S. before Trump’s deadline. “We need to be reaching important agreements by Friday,” Sheinbaum told reporters Monday. “There’s ongoing communication on all issues, and I believe we’re in a position to make it happen.”

She also hinted that if necessary, she would reach out to Trump directly. As negotiations continue, Mexico has been urging the U.S. to also address domestic drug distribution and consumption, rather than only pointing fingers at production in Mexico.

Big Guns Fear

Big companies like Walmart are getting nervous about the uncertainty, and the University of Michigan’s consumer sentiment index took a hit—dropping about 10% in the last month—partly because of growing worries over tariffs and inflation.

During the 2024 presidential election, many voters backed Trump, hoping he’d get inflation under control after it surged to a 40-year high following the COVID-19 pandemic under President Biden.

But Trump hasn’t let up on his tariff threats, even as French President Emmanuel Macron, standing right next to him, hinted that trade talks had made some progress. “We want fair competition, smoother trade, and more investment,” Macron said, emphasizing that both the U.S. and Europe should benefit from economic growth. He added that their teams would continue discussions to iron out the details.

Investors, businesses, and everyday people are still wondering whether Trump is using the tariff threats as a bargaining chip or if he genuinely believes tax hikes on imports will balance out his planned income tax cuts.

Despite ongoing discussions with Canadian and Mexican officials, Trump announced on Monday that he’s ending the 30-day suspension of tariffs that were originally set to take effect in February and plans a 25% import taxes on Mexico and most Canadian goods, with energy products like oil and electricity facing a lower 10% rate.

Trump argues these tariffs will pressure Canada and Mexico to take stronger action against illegal immigration and drug smuggling, particularly fentanyl. While Canada doesn’t contribute much to the fentanyl crisis, they’ve still appointed a “czar” to tackle the issue and keep Trump happy. Meanwhile, Mexico has deployed 10,000 National Guard troops to its border with the U.S. as part of its ongoing efforts.

On top of that, Trump wants to slap new tariffs to match what other countries charge the U.S. And these taxes might be even steeper since he plans to factor in subsidies, regulatory barriers, and the value-added tax (VAT) that’s common in Europe.

If Canada, Mexico, and Europe retaliate with their own tariffs, it could trigger a bigger trade war that stifles economic growth. A February report from Yale University’s Budget Lab estimated that these new tariffs could cut average U.S. incomes by $1,170 to $1,245 a year.

That’s a hit most Americans won’t be happy about.