The US imposed 25% tariffs on Canada and Mexico: Escalation of trade disputes and Global Implications

In 2025, the global trade landscape witnessed another major adjustment. US President Trump announced that starting from March 4th, a 25% tariff would be imposed on goods imported from Canada and Mexico. This decision not only triggered trade tensions in North America but also drew widespread attention and heated discussions worldwide.

Behind the US decision to impose tariffs on Canada and Mexico lies a complex mix of economic, political, and security considerations. For a long time, the US has maintained a significant trade deficit with these two neighboring countries. Although the US is the largest export market for both Mexico and Canada, their imports far exceed exports, leading to a continuous expansion of the trade deficit. The Trump administration believes that by applying economic pressure through tariffs, it can force these two countries to change their trade policies and reduce the trade deficit.

Furthermore, border security issues, particularly those related to illegal immigration and drug trafficking, have long been a focus of the US government. The Trump administration contends that Canada and Mexico have deficiencies in border management, which have exacerbated these problems. Therefore, imposing tariffs to pressure these two countries to enhance border security and jointly address border security challenges has become an important strategy of the Trump administration.

At the same time, this move by the Trump administration also faces domestic political pressure. During his campaign, Trump repeatedly emphasized the "America First" policy and promised to protect domestic industries and jobs. Imposing tariffs on goods from Canada and Mexico is seen as an important measure to fulfill his campaign promises and demonstrate a protectionist stance. Certain domestic industries in the US, such as steel and automotive manufacturing, have long faced competitive pressure from low-priced products from these two countries. These interest groups have continuously pressured the government to take measures to protect domestic industries.

The increase in tariffs will directly lead to a rise in the prices of imported goods, thereby affecting the purchasing power of American consumers. Canada and Mexico are important trading partners of the United States, and their export commodities cover a wide range from agricultural products to industrial goods, almost involving all aspects of the daily life of the American people. The increase in tariffs means that the prices of these goods will inevitably rise, increasing the living costs of American consumers.

For Canada and Mexico, the tariff policy will deal a heavy blow to their economies. As a neighboring country and an important trading partner of the United States, Mexico will directly bear the impact of the tariff policy. The increase in tariffs will seriously affect Mexico's export income, possibly leading to a slowdown in economic growth and an increase in the unemployment rate. As for Canada, although its economy is more diversified, its trade relationship with the United States remains close. The tariff policy will increase the cost of Canadian export goods and reduce their competitiveness in the US market.

In addition, the United States, Mexico, and Canada are important global economies. The trade frictions among the three countries will be transmitted to other countries and regions through trade channels and industrial chains, having a profound impact on the global economy. The International Monetary Fund (IMF) has repeatedly warned that trade frictions will lead to a slowdown in global economic growth. The implementation of the tariff policy will undermine the trade order established by the North American Free Trade Agreement (NAFTA) and its replacement, the United States-Mexico-Canada Agreement (USMCA), increase trade costs, reduce trade efficiency, and affect the stability of the global supply chain.

The implementation of tariff policies will increase the uncertainty of the global economy. Enterprises will find it difficult to predict the future trade environment and policy trends, which may lead to a decline in investment willingness and a slowdown in production activities. At the same time, tariff policies may also trigger fluctuations in the financial market and affect the stability and development of the global economy.

In the face of the challenges and uncertainties brought by tariff policies, the United States, Mexico and Canada need to seek solutions through negotiations and consultations. The three countries can hold dialogues on tariff issues, explore ways to balance the interests of all parties, reduce trade frictions, promote trade liberalization and economic integration. At the same time, the international community should also strengthen cooperation and coordination to jointly maintain the stability and prosperity of the global trade system.