The new tariffs will be more extensive than those imposed during Trump’s first term.
Starting Tuesday, the U.S. will enforce a 25% tariff on imports from Canada and Mexico, along with an additional 10% levy on Chinese goods. This escalation broadens the trade war, affecting both allies and rivals. Energy imports from Canada, including oil, gas, and electricity, will face a lower 10% tariff to mitigate consumer impact.
Canada responded immediately with matching 25% tariffs on up to $155 billion worth of U.S. goods, including alcohol and fruit, according to reports from the Associated Press. Mexico also announced retaliatory measures, while China condemned the move, vowing countermeasures and a formal complaint to the World Trade Organization.
President Trump signed the tariff orders on Saturday, tying their removal to resolving what the administration calls a border “crisis” related to illegal immigration and drug trafficking.
While some China hawks support a tougher stance, critics argue that Trump’s approach lacks strategic direction.
“I don’t think there’s a coherent strategy on tariffs,” said Derek Scissors, a senior fellow at the American Enterprise Institute and former Trump trade advisor. “He’s winging it, claiming a trade deficit with Canada that doesn’t exist and blaming them for fentanyl smuggling.”
Markets reacted negatively, with U.S. stocks erasing gains after the announcement. The Dow fell 0.8%, the S&P 500 dropped 0.5%, and the Nasdaq declined 0.3%.
“We expected tariffs—but not on Canada and Mexico first,” wrote Chris Krueger, a policy strategist at TD Cowen. “The chaos premium is here.”
The tariffs will be implemented under the International Emergency Economic Powers Act, requiring a national emergency declaration. Legal challenges are expected, but courts often defer to the president on national security matters.
Brad Setser, a former senior advisor to the U.S. Trade Representative, warned on X that the new tariffs represent a “massive shock” to the U.S. economy, calling them “a bigger move in one weekend than all of Trump’s first-term trade actions combined.”
Despite Trump’s tough rhetoric on China, his administration’s actions suggest a different goal. Rather than decoupling, Trump aims for “more balanced trade by using state power to direct Chinese demand toward the U.S.,” Setser argued.
Trump’s unpredictable tariff policies, including his reversal on banning TikTok, have left investors struggling to gauge long-term impacts.
“Investors have whiplash,” said Tobin Marcus, head of U.S. policy at Wolfe Research. “It’s exhausting trying to follow this chaos and plan beyond the next two days.”
