The Trump administration's 25% tariffs on goods from Canada and Mexico went into effect Tuesday morning, just hours after U.S. stocks tumbled on Monday. There will also be a 10% tariff on energy imports, which could cause gas prices to begin to go up this week.
The tariffs went into effect nearly a month after President Trump announced plans to impose them. In a post on Truth Social, President Trump claimed that drugs were coming across the border "from Mexico and Canada at very high and unacceptable levels." Trump had paused tariffs on both nations after their leaders said they would bolster border security and assist the U.S. in stopping the flow of illegal drugs.
Before the tariffs went into effect, the White House released a statement saying that Canada and Mexico have failed to stop the flow of illegal drugs into the U.S.
"While President Trump gave both Canada and Mexico ample opportunity to curb the dangerous cartel activity and influx of lethal drugs flowing into our country, they have failed to adequately address the situation," the statement read. "The flow of contraband drugs like fentanyl into the United States, through illicit distribution networks, has created a national emergency, including a public health crisis."
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President Trump also added a 10% tariff on goods from China. Additionally, the president said a planned 25% tariff on automobile, semiconductor, and pharmaceutical imports will begin on April 2.
Tariffs are fees charged to companies for importing their goods from another country. Many economists believe that most companies will pass the cost of a tariff to the consumer instead of absorbing the fee.
Canadian Prime Minister Justin Trudeau responded late Monday saying there is "no justification" for the tariffs imposed by President Trump. Trudeau then issued retaliatory tariffs against the U.S. He announced a 25% tariff on $155 billion of goods being sent from the U.S. into Canada.
Trudeau noted that the tariffs negate a free trade agreement signed by President Trump during his first term in office.
"Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures. While we urge the U.S. administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal," Trudeau said.
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"Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs," Trudeau added. "Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term.”
According to research released in October 2024 by Georgia State University, Arizona State University, and Colorado State University, tariffs might not only cause an increase in prices for consumers, but they can also disrupt supply chains.
China, Mexico and Canada are the United States' three largest trading partners, so their potential impacts could be widely felt if President Trump moves forward with them.
Patrick De Haan, who analyzes gas price trends for Gas Buddy, said gas prices could go up immediately for New England states, potentially rising by as much as 40 cents per gallon within the next two weeks. He noted, however, that the tariffs could be offset by an economic slowdown, which would lower demand for energy and thus keep prices from rising too much.
