WASHINGTON, March 3 -As the Tuesday deadline approaches, U.S. President Donald Trump is set to finalize the tariff levels on imports from Canada and Mexico, with decisions expected by Monday evening. The proposed tariffs include a 25% duty on all imports from both nations, with a separate 10% tariff specifically targeting Canadian energy exports. The move has sparked concerns among business leaders and economists, who argue that imposing such tariffs on over $900 billion worth of trade could significantly disrupt the North American economy.
Last-Minute Negotiations Underway
Commerce Secretary Howard Lutnick indicated on Sunday that the tariff decision remains fluid, suggesting that the final rates could be adjusted based on ongoing negotiations. The White House is currently evaluating the efforts made by Canada and Mexico in addressing key U.S. concerns, particularly border security and the fight against fentanyl trafficking.
Lutnick acknowledged on Monday that both countries have taken steps to enhance their border controls, but emphasized that further action is needed to stem the flow of fentanyl into the United States. “The efforts by both Mexico and Canada at the border have been commendable,” he remarked. However, he stressed that the fight against fentanyl—a highly potent opioid linked to tens of thousands of American deaths annually remains a top priority.
“The president is deeply committed to saving American lives,” Lutnick noted. “For these tariffs to be reconsidered, Canada and Mexico must take stronger actions against drug cartels and the fentanyl trade.”
Potential Tariffs on China Over Fentanyl Trafficking
In addition to the measures against Canada and Mexico, Trump is also poised to increase tariffs on Chinese imports linked to fentanyl trafficking. The current 10% tariff on these goods is expected to double to 20%, unless Beijing takes decisive steps to curb illicit fentanyl shipments to the U.S. Although Lutnick did not provide specifics on changes to the duties, this policy could impact approximately $439 billion worth of Chinese exports annually.
Canada and Mexico’s Response Plans
Over the past week, high-level officials from Canada and Mexico have met with Trump administration officials in an effort to negotiate solutions. However, the White House remains dissatisfied with the current pace of progress in reducing fentanyl-related deaths.
In response, Mexico has ramped up its anti-drug operations and hinted at new restrictions on imported Chinese goods. Mexican President Claudia Sheinbaum stated on Monday that her government remains composed ahead of Trump’s final decision. “We are prepared for any scenario,” she assured, adding that Mexico has multiple contingency plans in place should tariffs be imposed.
Meanwhile, Canadian officials have expressed concern over the potential economic fallout. Canada is already facing a 14.5% tariff on softwood lumber exports to the U.S., and further trade restrictions could exacerbate economic tensions between the two nations.
Trump’s Unyielding Trade Strategy
White House trade adviser Peter Navarro reinforced the administration’s firm stance on tariffs, dismissing concerns over potential economic repercussions. Navarro emphasized that the impact of these tariffs on inflation would be negligible. “The president is committed to ensuring America’s economic strength through strategic trade policies, and this is the path forward.”
Trump has also announced additional trade measures, including a national security investigation into lumber and wood product imports, which could lead to even steeper tariffs. Furthermore, he has revived an inquiry into digital services taxes levied by foreign governments, proposed new fees on Chinese-built ships docking in U.S. ports, and initiated a probe into copper imports.
These actions align with Trump’s broader strategy of imposing “reciprocal tariffs,” which aim to match or counteract the duties imposed by other nations. This approach could have significant consequences for European Union member states, given their reliance on value-added taxes on trade.
New Restrictions on Low-Value Imports
Late Sunday, the White House issued additional directives targeting low-value imports from Canada and Mexico. Under these new orders, packages valued under $800 will no longer qualify for duty-free entry into the U.S. This exemption, known as the “de minimis” rule, has previously allowed a significant volume of small shipments to enter without customs duties.
The restriction will be enforced once the U.S. Commerce Department determines that adequate screening procedures are in place. Officials argue that fentanyl traffickers have exploited this loophole, using it to smuggle fentanyl and its precursor chemicals into the country with minimal oversight.
Earlier in February, Trump suspended the de minimis exemption for Chinese imports, but logistical challenges forced U.S. Customs and Border Protection to temporarily halt enforcement. Airports across the country struggled to process the backlog of packages, leading to delays and further scrutiny over the exemption’s impact.
The Economic and Political Fallout
While Trump and his administration view these tariff measures as necessary to protect American industries and combat illicit drug trade, critics warn that such aggressive trade policies could lead to economic instability. Some economists caution that imposing extensive tariffs could fuel inflation and disrupt global markets.
Desmond Lachman, a senior fellow at the American Enterprise Institute, argued that these “tariffs on steroids” could push the world economy toward recession. “The ripple effects of these trade restrictions could be severe,” he warned.
As the Tuesday deadline looms, businesses and government officials across North America are closely monitoring Trump’s final decision. The outcome of these tariff negotiations could have lasting implications on U.S. trade relations, economic stability, and the broader fight against fentanyl trafficking.