Trump Doubles Down on Tariffs; Will Canada and Mexico Shut Off U.S. Energy?

WASHINGTON D.C. — President Donald Trump has announced sweeping new tariffs on the United States’ three largest trading partners, escalating tensions with key allies and setting off economic and political repercussions across North America.

Starting Tuesday, a 25% tariff will be imposed on all goods imported from Canada and Mexico, except for Canadian oil and energy exports, which will face a 10% levy. Chinese imports will be subject to a 10% tariff. The executive order, signed Saturday, states that these measures will remain in place indefinitely, with Trump warning that rates could increase further if affected countries retaliate.

Trump justified the move by citing three primary concerns: illegal immigration, the influx of fentanyl into the U.S., and what he described as economic imbalances caused by trade deficits with Mexico and Canada. “These drugs kill tens of thousands of Americans each year, including 75,000 deaths per year attributed to fentanyl alone,” the White House said in a statement.

Despite previous efforts by Canada and Mexico to curb illegal border crossings and drug trafficking, the tariffs remain in place. Mexico recently conducted its largest-ever fentanyl seizure, while Canada has increased surveillance along its border. However, Trump’s administration has not specified what additional steps these nations must take to have the tariffs removed.

Economic and Political Fallout

The tariffs have triggered widespread backlash from U.S. trade partners, businesses, and political leaders. Canada and Mexico have vowed to retaliate, with Canada signaling it will impose tariffs on U.S. exports such as Florida orange juice, Tennessee whiskey, and Kentucky peanut butter.

Canadian Prime Minister Justin Trudeau is set to address the nation, having already consulted with Mexican President Claudia Sheinbaum. Meanwhile, Mexico’s government has warned that the tariffs could push its economy into recession, given that 80% of its exports go to the U.S. The Peterson Institute for International Economics estimates that Mexico’s economic output could shrink by two percentage points if the tariffs remain in place.

“We need enlightened leaders. We don’t give in to states that behave like bullying thugs,” said Michel Leblanc, President and CEO of the Chamber of Commerce of Metropolitan Montreal.

Doug Ford, the Premier of Ontario, echoed that sentiment, stating, “Canada now has no choice but to hit back and hit back hard.” He called on the federal government to impose retaliatory tariffs, adding that the U.S. tariffs would put 450,000 Ontario jobs at risk.

The Canadian Labour Congress has urged the federal government to take an aggressive stance, calling for a complete cutoff of U.S. access to Canadian resources, including electricity, oil, and critical minerals. “The United States must feel immediate pain for their actions aimed at harming the Canadian economy and its workers,” said Bea Bruske, President of the Canadian Labour Congress.

Polling suggests strong public support for retaliation, with 77% of Canadians backing tariffs on U.S. goods and 75% supporting restrictions on U.S. access to Canadian resources.

Impact on Consumers and Businesses

The tariffs are expected to raise the cost of living for American consumers, with businesses passing the increased import costs onto customers. The U.S. imports nearly $467 billion in goods from Mexico, $401 billion from China, and $377 billion from Canada annually, covering essential products such as cars, food, oil, and electronics.

According to the U.S. Department of Agriculture, Mexico supplies 31% of all fruits, vegetables, and alcoholic beverages imported into the U.S., while Canada is a key supplier of meat and grains. Prices for avocados, tomatoes, and other produce could rise sharply.

Canada is also the top supplier of crude oil to the U.S., providing an average of 140 million barrels per month. This amounts to nearly four times the amount imported from all OPEC+ countries combined. A 10% tariff on Canadian oil could drive up gasoline prices, particularly in the Midwest, where refineries depend on Canadian crude.

“The tariffs will increase costs for the U.S. refining industry and cause Canadian producers to reduce output,” said Clayton Seigle, a senior fellow at the Center for Strategic and International Studies.

The auto industry is bracing for impact, as North American manufacturing supply chains are deeply integrated. Vehicles assembled in Canada and Mexico often contain a high percentage of U.S.-made parts, meaning tariffs could disrupt production and increase costs for American consumers. The Alliance for Automotive Innovation estimated that seamless automotive trade in North America accounts for $300 billion in economic value.

“Seamless automotive trade not only keeps us globally competitive, but it also supports jobs, vehicle choice, and affordability in America,” said John Bozzella, the group’s president.

Tariffs on lumber, plastics, pharmaceuticals, and electronics could also push up prices, further straining American consumers who are already dealing with inflation.

Tariffs as a Political and Economic Gamble

Trump and his advisors argue that tariffs will generate revenue, boost domestic manufacturing, and pressure foreign governments into making concessions. However, economic experts warn that tariffs historically have had limited success in reshoring jobs.

“There’s no recent evidence that American companies will manufacture those goods here. It’s expensive to manufacture in the U.S.,” said one trade expert. “It’s easier for companies to pay the tariff and pass the cost onto consumers.”

Some of Trump’s supporters have claimed that tariffs could generate enough revenue to eliminate federal income taxes. However, data from the Congressional Budget Office suggests otherwise. Tariffs have never accounted for more than 2% of total federal revenue, while individual income taxes contribute nearly 50%.

Federal Reserve Chair Jerome Powell has yet to comment on the tariffs’ potential impact on inflation, but economists predict they could further disrupt markets.

Political Divisions in the U.S.

Democrats and some Republicans have denounced the tariffs. Senate Majority Leader Chuck Schumer called them “a tax on American consumers.” Democratic Representatives Suzan DelBene and Don Beyer issued a joint statement saying, “President Trump just started a trade war that will raise prices on American families and invite retaliation against American businesses, workers, and farmers.”

Even within Trump’s administration, there are concerns. Commerce Secretary nominee Howard Lutnick dismissed fears of inflation, stating, “The economy of the United States will be much, much better.” However, Treasury Secretary Scott Bessent and other top advisors have urged caution.

Despite the criticism, Trump remains committed to the tariffs and hinted that additional measures are on the way. “This is just the beginning,” he said, adding that tariffs on the European Union and additional duties on semiconductors, oil, and steel could be imposed as early as February 18.

As tensions rise, Canada and Mexico are weighing their next moves. If both nations proceed with retaliatory tariffs, the North American economy could enter a period of heightened uncertainty, with businesses and consumers bracing for the financial impact.

Key Updates from Canada

• Prime Minister Justin Trudeau is set to address the nation at 8:30 p.m.

• Ontario Premier Doug Ford warns that 450,000 Ontario jobs are at risk.

• The Canadian Labour Congress is calling for a full cutoff of U.S. access to Canadian resources, including oil and electricity.

• Polling data shows 77% of Canadians support retaliatory tariffs.

• Industry leaders warn that supply chains and energy markets could face severe disruptions.

As trade tensions escalate, both economic and political consequences loom large. The next steps taken by Canada, Mexico, and the United States will determine whether this conflict leads to prolonged economic hardship or a negotiated resolution.