By Gavin Bade in Washington, Santiago Pérez in Mexico City and Vipal Monga in Toronto
President Trump said the U.S. would go ahead with 25% tariffs on goods from Canada and Mexico effective Tuesday, declaring there was "no room left" for negotiations with America's neighbors.
"Tomorrow, tariffs -- 25% on Canada, and 25% on Mexico -- and that will start tomorrow," Trump said Monday at the White House. "So they're going to have a tariff, and what they have to do is build their car plants, frankly, and other things, in the United States, in which case you have no tariffs."
U.S. stocks fell in afternoon trading after Trump said the tariffs would move forward.
Trump previously delayed the tariffs for a month after those countries agreed to help address fentanyl-smuggling and migration, but his team has indicated he wasn't yet satisfied with the progress of efforts to halt drug-smuggling, despite weeks of talks across the three governments.
Trump has said he also plans to increase duties on goods from China by 10%, on top of 10% duties he imposed in February and other tariffs already in place on the world's second-largest economy.
Trump's announcement appeared to cap off a flurry of negotiations between the North American governments over how to avoid the tariffs.
Canadian officials met in Washington last week with U.S. border czar Tom Homan and members of Congress to press their case that Canada was tightening border security in response to Trump's concerns about fentanyl and migration. They left unsure what Trump wants, said Canada's immigration minister, Marc Miller.
"It's a moving target, and that's frustrating," he said.
Trump is likely to impose tariffs on Canada and Mexico using the International Emergency Economic Powers Act, a 1977 law that allows the president wide authority in tariffs and economic sanctions when he declares a national emergency. That was the law used to justify the 10% tariff increase on China in February, as well as the previously threatened Canada and Mexico tariffs, before they were kicked down the road to the March 4 deadline.
U.S. carmakers gathered for a trade call with Trump administration officials on Thursday, as they had a month earlier, when Trump's tariff threats over fentanyl threatened to blow up their North American supply chains. This time they had a different host -- and a less satisfactory takeaway.
Instead of White House chief of staff Susie Wiles, Commerce Secretary Howard Lutnick addressed the group. While Wiles had reassured carmakers the administration would consider carve-outs for cars that comply with the U.S.-Mexico-Canada Agreement -- the 2020 update to the North American Free Trade Agreement -- Lutnick made no such overture, people with knowledge of the call said. Participants left unsure what Trump would do.
The White House denied that its message to industry and trading partners has changed over the past two months, saying there was "no contradiction or change in message" between the two calls with the auto industry, according to an administration official.
Mexican President Claudia Sheinbaum said Monday that she was waiting for Trump to make a decision about tariffs. "Everything is possible," she said.
Canadian Prime Minister Justin Trudeau said late Monday his government would implement retaliatory tariffs on nearly $100 billion of imported U.S. goods. He said his government swiftly addressed the Trump administration's concerns about border security and fentanyl trafficking, or the reason Trump said hefty tariffs targeting America's neighbors were necessary. "Canada will not let this unjustified decision go unanswered," Trudeau said, adding fentanyl seizures from Canada at the U.S. border plunged in January from the previous month.
In addition to taking steps to disrupt migration and the fentanyl trade, Mexico has increased arrests of people allegedly tied to criminal groups. Sheinbaum said Mexico was ready to respond to whatever Trump decides. "There will be coordination, but not subordination," she said.
Treasury Secretary Scott Bessent told Bloomberg TV on Friday that Mexico made a "very interesting proposal" to match the U.S. on tariffs for imports from China.
"He knows they have done a good job on the border, they haven't done enough on fentanyl. Let's see how the president weighs that today," Lutnick said Monday morning on CNN.
The higher tariffs for China appear more settled. Engagement between the U.S. and Chinese governments has been scant.
Raising duties on goods from China by an additional 10% would generate about $86 billion overall -- more than the yearly tariff revenue collected by all of Trump's first-term tariffs, according to an estimate by analytics company Trade Partnership Worldwide. That sum would outpace the $77 billion the U.S. collected in tariff revenue from all sources in 2024, Trade Partnership Worldwide said.
China imposed retaliatory tariffs on the U.S. last month and opened probes into the conduct of U.S. companies.
Beijing has deflected U.S. charges that it was to blame for America's fentanyl crisis. By foregoing big concessions to Trump, and with its measured response to Trump's additional 10% tariffs early last month, Beijing is signaling an effort to play the long game and position itself to reach a deal later with the U.S., analysts say.
The National Economic Council, led by Kevin Hassett, raised concerns about inflation that could result from the tariffs, according to a person with knowledge of the discussions. Other officials have said the tariffs would have a negligible impact on inflation because the first-term duties didn't push up prices significantly.
Write to Gavin Bade at gavin.bade@wsj.com, Santiago Pérez at santiago.perez@wsj.com and Vipal Monga at vipal.monga@wsj.com
(END) Dow Jones Newswires
March 03, 2025 22:07 ET (03:07 GMT)
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