In a major policy shift, President Donald Trump warned on Sunday that Americans might experience “some pain” due to new tariffs on imports from Canada, Mexico, and China. He justified the move as necessary to combat illegal immigration and drug trafficking, claiming Canada would “cease to exist” without its trade surplus with the U.S.
Signed at Trump’s Florida resort, the tariffs have raised concerns, potentially disrupting North American trade and straining relations with China. Canadian Ambassador Kirsten Hillman expressed confusion, stating, “Canadians are perplexed. We view ourselves as your neighbor, your closest friend, your ally.”
While fulfilling a campaign promise, Trump risks undermining his pledge to lower inflation. Acknowledging this, he wrote on social media, “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
The administration has not specified the economic impact or conditions for lifting the tariffs, set to take effect Tuesday. Homeland Security Secretary Kristi Noem suggested any price hikes would result from external reactions rather than the tariffs themselves.
Trump on tariffs: “We may have short term, some, a little pain. And people understand that.” pic.twitter.com/cDJI6rbmmW
— Aaron Rupar (@atrupar) February 3, 2025
Trump has singled out Canada, which responded with its own tariffs. The U.S. is imposing a 25% tariff on Canadian goods and a 10% tax on oil, gas, and electricity. In retaliation, Canada is placing 25% tariffs on over $155 billion Canadian (US$105 billion) worth of U.S. products, including alcohol and fruit.
Trump dismissed Canada’s importance, stating, “We don’t need anything they have. We have unlimited Energy, should make our own Cars, and have more Lumber than we can ever use.” Despite this, Canada supplies 25% of U.S. oil. He went further, claiming Canada should become the U.S.’s 51st state to benefit from lower taxes and stronger military protection.
Prime Minister Justin Trudeau urged Canadians to buy domestic goods, warning the tariffs would harm North America’s economy. With 75% of Canada’s exports going to the U.S., its countermeasures target a range of industries, from agriculture to steel. Ambassador Hillman noted, “Canadians just don’t understand where this is coming from … and probably there’s a little bit of hurt, right?”
Mexico, also imposing retaliatory tariffs, urged the U.S. to address domestic drug issues instead. After discussions with Trudeau, President Claudia Sheinbaum reaffirmed a stronger Mexico-Canada alliance. Meanwhile, China plans to challenge the tariffs at the World Trade Organization.
For Trump, a key concern is whether inflation will turn the tariffs into a political liability. Previously, he blamed Biden for inflation and promised economic stability under his leadership. However, his new tariffs could have the opposite effect.
Former Treasury Secretary Larry Summers warned they could increase inflation by 1% and hurt American consumers. “On the playground or in international relations, bullying is not an enduringly winning strategy. And that’s what this is,” he said, adding that the move could benefit China’s Xi Jinping by weakening U.S. alliances.
Analysts suggest Trump’s tariffs may ultimately harm the voters he aims to help. The Budget Lab at Yale estimates they could cost the average U.S. household $1,245 this year, amounting to a $1.4 trillion tax increase over a decade. Goldman Sachs believes the tariffs will likely take effect as planned, though a last-minute compromise remains possible.