US tariffs on Mexico, Canada take effect on Tuesday: What to know

WASHINGTON - President Donald Trump is moving ahead with 25% tariffs on imports from Canada and Mexico, which took effect on Tuesday, while doubling tariffs on Chinese goods to 20% a day earlier than expected. 

The move escalates trade tensions with the U.S.’s three largest trading partners. China, in response, announced Tuesday it would impose additional tariffs of up to 15% on imports of key U.S. farm products, including chicken, pork, soy and beef, and also expanded controls on doing business with key U.S. companies. Canada said it would slap tariffs on more than $100 billion of American goods.

Trump has framed the tariffs as an effort to curb illegal immigration and drug trafficking, particularly fentanyl, while also aiming to rebalance trade and bring more manufacturing back to the U.S. However, the decision has sparked renewed concerns over rising inflation and disruptions to supply chains.

The United States conducted $2.2 trillion in trade with Mexico, Canada, and China last year, and businesses fear that the new tariffs will push up costs for American consumers while triggering countermeasures that could further disrupt global markets.

Impact on the auto industry

By the numbers:

The auto industry is expected to be among the hardest hit, as manufacturers rely on cross-border supply chains between the U.S., Canada, and Mexico.

In 2024, the U.S. imported:

• $79 billion in vehicles from Mexico, the top supplier.
• $31 billion in vehicles from Canada.
• $81 billion in auto parts from Mexico and $19 billion from Canada.

With the new tariffs in place, car prices are expected to rise. Analysts at S&P Global Mobility estimate that the tariffs could increase the price of a new car by $3,000, at a time when car costs are already at record highs.

Scott Lincicome, a trade analyst at the libertarian Cato Institute, warned that the tariffs will disrupt production, saying, "You throw 25% tariffs into all that, and it’s just a grenade."

China, another key player in the auto supply chain, exported $18 billion in auto parts to the U.S. last year. With tariffs on Chinese goods now doubled, further cost increases are expected.

Higher prices at the pump, in stores, and on tech

Beyond the auto industry, tariffs will impact a range of essential goods, from energy to food to electronics.

• Energy: Canada is the U.S.'s largest foreign supplier of crude oil, shipping $98 billion worth of crude to the U.S. last year. With oil and natural gas now subject to a 10% tariff, gas prices in the Midwest and Northeast could rise.
• Food: Mexico supplies nearly half of U.S. imported vegetables and 40% of fruits, including 90% of avocados. Grocery prices could climb further, adding to consumer frustration over inflation.
• Technology & retail: China remains a top source for cell phones, computers, and electronics. The increased tariffs on Chinese imports could drive up costs on these everyday items.

Trade partners threaten retaliation

The other side:

Canadian Prime Minister Justin Trudeau said his country would slap tariffs on more than $100 billion of American goods over the course of 21 days. 

Mexican President Claudia Sheinbaum has not yet detailed specific countermeasures but said Mexico is prepared to respond. Mexico had already stationed 10,000 National Guard troops at the border to crack down on smuggling and illegal immigration in an attempt to address U.S. concerns.

The tariffs announced by China are due to take effect on March 10, though goods already in transit will be exempt until April 12. Imports of U.S. grown chicken, wheat, corn and cotton will face an extra 15% tariff, a notice by the ministry said. Tariffs on sorghum, soybeans, pork, beef, seafoods, fruit, vegetables and dairy products will be increased by 10%.

Also on Tuesday, Beijing placed 10 more U.S. firms on its unreliable entity list, which would bar them from engaging in China-related import or export activities and from making new investments in the country. Some already likely face restrictions on trade with China if their products can be used for both military and civilian purposes.

The firms listed are TCOM, Limited Partnership, Stick Rudder Enterprises LLC, Teledyne Brown Engineering, Huntington Ingalls Industries, S3 AeroDefense, Cubic Corporation, TextOre, ACT1 Federal, Exovera and Planate Management Group.

Separately, China added 15 U.S. companies to its export control list, including aerospace and defense companies like General Dynamics Land Systems and General Atomics Aeronautical Systems, among others.