USA threatens to introduce tariffs on goods from Canada and Mexico

It is important to note that these are not additional tariffs on vehicle imports specifically, but on all imports from the countries mentioned – only “energy resources from Canada will have a lower 10% tariff,” the White House announced. These are not direct sanctions against a specific economic sector, but rather the response to “an emergency situation.” The US government says the “extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency” and that President Trump “is taking bold action,” holding Mexico, Canada, and China “accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.”

In other words, the aim is to exert general economic pressure on the governments of these three countries. The memo literally states that they want to use their influence “to ensure Americans’ safety.”

The import duties were initially due to come into force on Tuesday 4 February. The energy tariffs on oil, gas and electricity from Canada are to be introduced two weeks later, i.e. from 18 February. Following talks with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau, Trump has agreed to postpone the tariffs by one month. However, the issue is not off the table yet. Both countries will send additional soldiers to the US border. “These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country,” Donald Trump explained after speaking to Sheinbaum.

The additional tariffs on Chinese products could not be averted or postponed. The Chinese Ministry of Finance announced countermeasures, such as a 15% tariff on certain types of coal and liquefied natural gas.

In the case of the automotive industry, the tariffs on imports from Mexico and Canada are particularly relevant – the importance of imports from China had already declined in recent years, partly due to tariffs, but also the eligibility criteria of former US President Joe Biden’s Inflation Reduction Act. However, many US car manufacturers produce vehicles for the US market in Canada and Mexico, as the three countries were actually duty-free zones under the NAFTA agreement.

It is not yet possible to predict exactly how hard the new regulations will hit the industry. They are also likely to vary from company to company. When presenting the business figures for 2024 last week, GM CFO Paul Jacobson mentioned that the carmaker was preparing for the introduction of such tariffs. In recent weeks and months, General Motors had already brought as many vehicles built in Canada and Mexico as possible to the USA and stored them there. “Every delivery that we can make before a tariff is instituted, it’s that much better, rather than sitting on inventory,” Jacobson said.

In response to the impending tariffs, the Canadian government had announced that it will also impose 25 per cent tariffs on $155 billion worth of goods – $30 billion (about €20 billion) immediately and $125 billion (€83 billion) in a second phase, in which the tariffs will also apply to electric vehicles. Canada also intends to take legal action against the US tariffs. That plan, too, has been postponed.

According to Reuters, the products sanctioned by Canada include orange juice, peanut butter, wine, beer, motorbikes and cosmetics. The second round, worth CAD 125 billion, will be relevant for the automotive industry: In around three weeks, the Canadian government plans to present another list, at which point cars and trucks, including electric vehicles, will also be affected.

whitehouse.gov, canada.ca, reuters.com, apnews.com (postponement)