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US President Trump confirms plans to hit neighbors with 25% tariffs

The President of the United States mentioned that his administration has not yet reached a decision on the taxation of oil imports from Canada and Mexico.

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Donald Trump has announced plans to implement 25% tariffs on imports from Canada and Mexico starting February 1, 2025, US President Donald Trump has said. He pointed out that the issue of taxing oil imports from neighboring states remains unresolved.

He defended these tariffs as a necessary measure to address issues such as trade deficits, illegal immigration, and the fentanyl crisis. Trump mentioned that the tariff rate might increase further and that a decision regarding the exemption of oil imports would be made soon.

Trump had previously vowed to implement significant tariffs on Canada, Mexico, and China immediately following his inauguration. He pointed to illegal immigration, drug trafficking, and an increasing trade deficit as key reasons for this move.

This decision has raised alarms about potential economic repercussions, with both Canada and Mexico promising to retaliate. The tariffs could lead to higher prices for a range of products, including gasoline, pickup trucks, and even guacamole dip for Super Bowl gatherings. This policy change suggests a potentially disruptive shift in North American trade relations, putting key industries like automotive and energy at risk.

Trump's tariffs could jeopardize the trade agreement he negotiated with his neighbors during his first term. The U.S.-Mexico-Canada Agreement (USMCA) was intended to create stability in North American trade, allowing businesses to invest with confidence. However, the introduction of these tariffs could weaken the agreement and spark a trade war.

The tariffs aim to pressure America's two neighbors to take stronger action against the flow of undocumented immigrants and fentanyl into the United States. Trump has also implied that these tariffs serve as a means to renegotiate trade agreements and achieve a more favorable balance of trade.

The potential consequences of these tariffs are considerable. For instance, the automotive industry, which depends heavily on supply chains that span the borders of the United States, Mexico, and Canada, could face serious challenges. The tariffs might raise the cost of vehicles and auto parts, resulting in higher prices for consumers. Furthermore, the energy sector could also feel the impact, with possible increases in gasoline prices.

Earlier this week, Canadian Foreign Minister Melanie Joly shared her “cautiously optimistic” view that diplomatic talks might still avert the imposition of tariffs. However, she emphasized that Ottawa is ready to take action if the White House decides to go ahead with the levies. Bloomberg reported earlier this month that Canada has compiled a list of US products worth $105 billion that could face retaliatory tariffs if the Trump administration proceeds with this plan.

In November, Mexico’s Economy Minister Marcelo Ebrard warned that new tariffs would significantly impact US automakers operating in Mexico.

“This will affect companies like General Motors and Ford Motor, which produce 88% of the pickup trucks sold in the US,” she remarked about the potential tariffs.

At the latest conference, Trump stated that his administration was considering new tariffs on Chinese imports, citing the country's alleged role in fentanyl production, a dangerous synthetic opioid. He warned of a potential 10% import tax on all goods from China, in addition to the tariffs on approximately $370 billion worth of imports that his administration enacted in 2018 and 2019, which led to a nearly three-year trade conflict with Beijing.

In November 2023, then-US President Joe Biden and Chinese leader Xi Jinping reached an agreement for China to decrease the export of materials related to opioid production.

The implementation of these tariffs marks a significant change in U.S. trade policy and may lead to extensive implications for trade relations in North America and the global economy.

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