On Friday, President Donald Trump and his press secretary announced that tariffs on China, Canada, and Mexico would be implemented on Saturday. Trump said that those nations could not possibly dodge the taxes.
White House Press Secretary Karoline Leavitt stated before to Trump’s speech in the Oval Office that the president “will be implementing 25% tariffs on Mexico, 25% tariffs on Canada, and a 10% tariff on China for the illegal fentanyl that they have sourced and allowed to [be distributed] into our country.”
Analysts are left to speculate about the potential impact of the tariffs and what else might be in store after Trump and other U.S. officials promised that they will be implemented.
Trump may announce fresh tariffs against Canada and Mexico that begin on March 1 and contain an exemptions process, according to a Reuters article released on Friday. Similarly, Trump advisors were reportedly looking for an 11th-hour agreement to reduce the duties on the two nations, according to a Wall Street Journal report published late Thursday.
On Friday afternoon, Leavitt declared the Reuters report to be untrue.
Leavitt said that she did not have a breakdown or update on exemptions when asked about one for oil imports, but that information would be made public on Saturday.
Later on Friday, Trump himself declared that 10% tariffs, not 25%, will be applied to Canadian crude oil.
The president also announced on Friday that further wide tariffs, including those on natural gas (NG00) and oil (CL00) (BRN00), will be implemented around February 18. Additionally, he told reporters in the Oval Office that duties would be imposed on the European Union, steel, copper (HG00), computer chips (SMH), and medicines (PJP).
Another important date for tariff watchers is April 1, when a report on the reasons behind the ongoing U.S. trade imbalances and suggested solutions is due under one of the president’s executive orders.
“Don’t get too comfortable either way—this is just the warm-up. As the deadline of February 1 draws near, we will probably see volatility and emotive forecasts based on Trump’s tariff decision. Kevin Muir, a former institutional trader who runs the Macro Tourist, a blog that examines macroeconomic wagers, stated that the major event will take place in April. “Although the market will not be pleased with tariffs, it’s really the April deadline that will signal the long-term decision,” he added in a Friday morning post.
The April report will present “the big tariff view,” according to Howard Lutnick, Trump’s nominee for commerce secretary, while a levy against Canada and Mexico would be “not a tariff, per se,” but rather “an action of domestic policy” linked to the “short-term issue” of drug trafficking and illegal migration.
Trump had warned that unless Canada and Mexico support his administration’s efforts to combat illegal immigration and the supply of fentanyl, a substance that has caused an overdose crisis, U.S. tariffs of 25% might be imposed starting Saturday. Because of worries over fentanyl, he has also threatened to impose a 10% tariff on China.
The possible tariffs on neighboring nations “clearly fall into the ‘negotiation tool’ bucket, which we think makes it much less likely that Trump will tolerate significant economic pain for an extended period in this case,” Tobin Marcus, who is responsible for U.S. policy and politics at Wolfe Research, wrote in a note Thursday.
“We think the goal here is something like the Colombia case last weekend, where Trump was able to get a policy win at minimal cost,” Marcus stated. Additionally, according to the Wolfe Research analyst, his team anticipates that any tariffs Trump applies on Canada and Mexico will be temporary.
According to MarketWatch, 25% tariffs could increase the cost of the $900 billion worth of goods that Americans purchase from Mexico and Canada each year, including food, automobiles, TVs, toys, appliances, and other items. Nearly 30% of all imported goods come from the United States’ closest trading partners, which are its northern and southern neighbors.
Following Trump’s remarks during the trading session, the S&P 500 stock index, or SPX, had a significant loss on Thursday afternoon. However, by the end of the day, the majority of those declines had been reversed. After trading higher on Friday, the equities indicator lost ground following Leavitt’s remarks and ended the day down 0.5%.
