Trump rules out tariff exemptions for Canada and Mexico, raises China duties

US President Donald Trump dismissed any possibility of a last-minute deal with Canada and Mexico to avoid sweeping tariffs, while also signing an order to increase duties on China, AFP reported.

Trump had previously announced blanket tariffs on imports from Canada and Mexico in February, citing their failure to curb illegal immigration and drug trafficking. 

The measures were temporarily halted but are set to take effect on Tuesday. Speaking to reporters on Monday, Trump confirmed that there was “no room left” for the two countries to escape the levies, causing a dip in US stock markets.

Additionally, the White House confirmed that Trump signed an order raising tariffs on China from 10% to 20%, further intensifying trade tensions. 

The broad-ranging duties, particularly those on Canada and Mexico, are expected to disrupt supply chains in industries like automobiles and construction materials, potentially leading to higher consumer prices. 

This could complicate Trump's campaign pledge to lower costs for American households.

Trump stated that tariffs of up to 25% on Canada and Mexico were “all set.” He added, “What they’ll have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.”

In response, Canadian Foreign Minister Mélanie Joly called the impending tariffs an “existential threat” to Canada, warning that thousands of jobs were at stake. She added, “We are ready with counter-tariffs” if Trump follows through.

Meanwhile, Mexico’s President Claudia Sheinbaum said her government had contingency plans in place regardless of Trump’s final decision.

Trump also announced on social media that tariffs on agricultural imports would take effect on April 2. A White House official told AFP that this was part of the administration’s broader plan to implement reciprocal tariffs tailored to each trading partner.

Experts warn that these tariffs could fuel economic uncertainty. JPMorgan analysts said they expect the new measures to “create a significant new headwind to economic activity” and drive up consumer prices.

Trump’s use of emergency economic powers to impose tariffs on Canada, Mexico, and China is an unusual approach, and legal challenges may follow. “It remains to be seen how this will all play out in potential lawsuits,” said Ryan Majerus, a partner at law firm King & Spalding and a former US trade official.

In Canada, the construction sector is bracing for higher costs. Robert Dietz, chief economist at the National Association of Home Builders, noted that combined duty rates on Canadian lumber could exceed 50%. 

He added that futures prices for softwood lumber have already risen 8% in recent weeks, with homebuilders expecting cost increases of $7,500 to $10,000 per new single-family home.

The tariffs also come amid US concerns over fentanyl smuggling. While Washington has targeted China’s supply of chemicals used to manufacture fentanyl, many of these components have legitimate medical applications, complicating enforcement efforts.

Canadian Prime Minister Justin Trudeau pushed back against claims that his country was a major source of fentanyl and undocumented migrants, stating that less than 1% of these entries into the US occur via Canada. 

However, he warned that if the tariffs proceed, Canada would respond with a “strong, unequivocal, and proportional” reaction.

To address Trump’s concerns, Canada has introduced a Can$1.3 billion ($901 million) border security initiative and appointed a fentanyl czar to lead efforts against the drug trade. 

Mexico, in turn, recently extradited several notorious drug lords to the United States in an effort to avoid Trump’s trade penalties.

Despite these efforts, Trump appears firm on his trade stance, setting the stage for heightened tensions with America’s closest trading partners.