Washington: U.S. President Donald Trump has declared that starting Tuesday, a 25% tariff on products from Mexico and Canada will take effect, signaling the end of negotiations with America’s two neighboring countries.
Trump’s announcement has sparked fears of a trade war in North America, as both Mexico and Canada have vowed to retaliate with tariffs on American goods.
Additionally, the U.S. is expected to impose an extra 10% tariff on Chinese imports, further tightening trade restrictions on America’s three largest trading partners compared to just a few weeks ago.
Speaking at the White House on Monday, Trump stated that Mexico and Canada have no other options left.
"You know the tariffs are ready. They will be implemented starting tomorrow [Tuesday]," he said. Trump added, "They will have to build their car plants and other industries in the U.S. If they do, there will be no tariffs."
Tariffs are domestic taxes imposed on goods imported into the U.S., calculated based on the value of the imports. For example, a vehicle worth $50,000 imported into the U.S. would be subject to a 25% tariff, adding an additional cost of $12,500.
These tariffs are paid by the American companies that import the goods, rather than the foreign exporters. As a result, tariffs act as a direct tax on domestic businesses, which must then decide whether to absorb the cost or pass it on to consumers.
In 2023, the U.S. imported approximately $3.1 trillion worth of goods, accounting for around 11% of the U.S. GDP. The tariffs on these imports generated about $80 billion in revenue for the U.S. government, roughly 2% of total federal tax revenues.
With these new tariffs in place, tensions in global trade are expected to rise, potentially impacting supply chains, pricing, and economic relations between the U.S. and its key trading partners.
