Trump’s tariffs go into effect for Canada, Mexico and China

As expected, President Donald Trump’s previously announced tariffs on Canada and Mexico went into effect at 12:01 a.m. EST on March 4, a move that will affect the cost of goods. One day later, the White House announced that a 30-day reprieve would be given to automakers for cars coming in through the United States-Mexico-Canada agreement (USMCA).

Both the Canadian and Mexican public have rallied behind their leaders’ resistance to the tariffs. Government liquor stores across the country have de-stocked U.S. booze, especially those coming from red states. The Ontario liquor market is huge, with annual retail sales typically exceeding $6-7 billion CAD. B.C.’s market is smaller but still represents annual sales of $3-4 billion CAD.

Apart from the now-exempt car manufacturers, the president has levied 25 percent tariffs on goods from Canada and Mexico and additional 10 percent tariffs on China. He imposed a lower 10 percent tariff on Canadian energy at the same time.

Both Canada and Mexico have announced retaliatory tariffs or plans to do so shortly. Canada immediately imposed 25 percent tariffs on $30 billion worth of U.S. products and will expand that to cover another $125 billion in three weeks’ time. Mexico plans to announce its retaliatory measures on Sunday, March 9.

Speaking from Parliament Hill in Ottawa on March 4, Canadian Prime Minister Justin Trudeau referred to President Trump as Donald and said the U.S. move to impose tariffs “is a very dumb thing to do,” adding that it would hurt both American and Canadian families.

In announcing the tariffs on March 3, Trump cited the fentanyl crisis, trade imbalances and border issues as reasons for their imposition.

Trump also said the tariffs would incentivize Canada and Mexico to build car manufacturing plants in the U.S.

The stress placed on fentanyl by Trump has people north of the border scratching their heads. According to federal statistics, U.S. border agencies seized 21,889 pounds of fentanyl during the 2024 fiscal year. Of that, just 43 pounds was seized at the U.S./Canada border, about 0.2 percent. Just over 21,000 pounds were impounded at the Mexican border. Since the end of the 2024 fiscal year, even less fentanyl has been seized at the Canadian border. The Canadian government also appointed a fentanyl border czar last month in response to Trump’s agitation on the subject.

As far as the trade deficit goes, it’s true that Canada runs a slight advantage on trade vis-à-vis the U.S. While Trump has said that the U.S. is subsidizing Canada to the tune of $200 billion annually, no one seems to know where that figure originates. Including goods and services, the actual trade deficit is around $32 billion in Canada’s favor. If Canadian oil sales to the U.S. were excluded, the U.S. would have a trade surplus of $58 billion.

Stocks quickly slipped after the announcement. The S&P 500 has dropped from a high of 6,200 in February to 5,842. The Dow Jones opened at 42,518 on March 5, down from its 52-week high of 45,073. Nasdaq sank 2.6 percent. Investor Warren Buffett was quoted on March 2 saying that tariffs are “an act of war,” adding that “over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay them.”

Trump had previously provided Canada and Mexico one month to address drug trafficking and illegal immigration before enacting the tariffs, which were set to go into effect in early February. He still placed a 10 percent tariff on China during that time.