Retaliatory measures and ‘Trade War’ fears intensify, as White House places tariffs on China, Mexico, and Canada
As was expected, the United States this week placed matching 25% tariffs on Mexico and Canada (with energy resources from Canada receiving a 10% tariff), as well as an additional 10% tariff on goods imported to the U.S. from China, are now in effect.
The tariffs on Mexico and Canada were initially supposed to go into effect in early February but were paused for a month, with the countries coming to terms on various border security issues.
As previously reported, in explaining its rationale for implementing tariffs, the White House cited the “extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl,” adding that this constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA).
This development was not a surprise, as President Trump had repeatedly stated during his campaign that implementing tariffs would be a key part of his administration’s economic and global trade strategy. Furthermore, shortly after being sworn in as President, Trump directed federal agencies to review trade relationships with China, Canada, and Mexico—the U.S.’s three largest trading partners—and made it clear that he would implement new or increased tariffs on them.
In a memo issued on January 21 to various federal government and cabinet officials, including the Secretaries of State, Treasury, Defense, Commerce, and Homeland Security, as well as the Director of the Office of Management and Budget, the U.S. Trade Representative, the Assistant to the President for Economic Policy, and the Senior Counselor for Trade and Manufacturing, Trump emphasized that in 2017, his administration had pursued trade and economic policies that prioritized the American economy, American workers, and national security.
The White House said this week that “[W]hile President Trump gave both Canada and Mexico ample opportunity to curb the dangerous cartel activity and influx of lethal drugs flowing into our country, they have failed to adequately address the situation.”
While these tariffs are now officially in effect, the White House has signaled that more are coming, including: a 25% tariff on U.S.-bound aluminum and steel imports set for March 12; and tariffs on all agricultural products and foreign automobiles, for a percentage yet to be stated, to take effect on April 2, and investigations into both copper and lumber imports.
Not surprisingly, China and Canada have placed retaliatory tariffs in kind against the U.S., according to various media reports, with a CNBC report noting that China will place additional tariffs of up to 15% on certain U.S. goods, effective March 10, and also restrict exports to 15 U.S. companies. The report added that these tariffs will primarily be placed on U.S. agricultural goods, including corn and soybeans, at 15% and 10%, respectively. And the Associated Press reported that the 15% tariffs will be placed on imports of chicken, wheat, corn and cotton from the U.S., as well as 10% tariffs on imports of sorghum, soybeans, pork, beef, seafoods, fruits vegetables and dairy products.
Canadian Prime Minister Justin Trudeau said on March 3 that there is no justification for the U.S. tariffs placed on Canada, explaining that less than 1% of the fentanyl intercepted at the U.S. border comes from Canada. To that end, he said that Canada has taken myriad steps to address the issue, including: implementing a $1.3 billion border plan with new choppers, boots on the ground, more co-ordination, and increased resources to stop the flow of fentanyl; appointing a Fentanyl Czar, listed transnational criminal cartels as terrorist organizations; launched the Joint Operational Intelligence Cell, and are in the process of establishing a Canada-U.S. Joint Strike Force on organized crime. And he added that in partnership with the United States, fentanyl seizures from Canada have dropped 97% between December 2024 and January 2025 to 0.03 pounds seized by U.S. Customs and Border Protection.
“Canada will not let this unjustified decision go unanswered,” said Trudeau. “Should American tariffs come into effect tonight, Canada will, effective 12:01 a.m. EST tomorrow, respond with 25 per cent tariffs against $155 billion of American goods—starting with tariffs on $30 billion worth of goods immediately, and tariffs on the remaining $125 billion on American products in 21 days’ time. Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures. While we urge the U.S. administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal. Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs. Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term.”
As for Mexico, President Claudia Sheinbaum said at her weekly press conference today that Mexico will introduce retailiatory tariffs against the U.S. on Sunday, March 9, according to a Bloomberg report. Following a late February announcement from the White House regarding planned tariff actions, Sheinbaum, at the time, downplayed the announcement and had signaled optimism that a deal could have been reached prior to today’s deadline, but that did not come to fruition. And a statement issued in November by Mexico’s finance ministry said that USMCA provided certainty for investors, and Sheinbaum said that, “The response to one tariff will be another, until we put at risk companies that we share.”
Reactions to the various tariffs by industry stakeholders, unsurprisingly, were swift, with National Retail Federation Executive Vice President of Government Relations David French saying that the decision by the U.S. to impose tariffs on its North American neighbors and two of its largest trading partners is a significant measure.
“Unfortunately, it is one that will only hurt hardworking Americans and the businesses that strive to provide customers with the products they want and need on a daily basis,” said French. “Tariffs are just one tool at the administration’s disposal to achieve a secure border, and we urge it to explore other options to accomplish the same goals. As long as these tariffs are in place, Americans will be forced to pay higher prices on household goods. We urge the Trump administration and our Canadian and Mexican counterparts to work together to quickly resolve our outstanding border security issues.”
From a trucking perspective, American Trucking Associations (ATA) President & CEO Chris Spear said that while President Trump rightfully placed an emphasis on tackling the challenges presented by fentanyl and the humanitarian crisis caused by unchecked illegal immigration, adding that the trucking industry is committed to being part of the solution—while adding that unintended consequences need to be avoided, as they could exacerbate high goods and groceries prices.
“With the success of USMCA and the growing trend of nearshoring, the North American supply chain has become highly integrated and supports millions of jobs,” said Spear. “Imposing border taxes on our two largest and most important trading partners will undo this progress and raise costs for consumers. The 100,000 full-time hardworking truckers hauling 85% of the surface trade in goods with Mexico and 67% of the goods traded with Canada will bear a direct and disproportionate impact. Not only will tariffs reduce cross-border freight, but they will also increase operational costs. The price tag of a new truck could rise by up to $35,000, amounting to a $2 billion annual tax and putting new equipment out of reach for small carriers.”
Chris Jamroz, Executive Chairman of the Board and CEO, Roadrunner, said that that these tariffs need to be viewed as taxes, although the level of proposed tariffs are still moving targets.
“Since plants and DCs are hard to relocate, the main question shippers will have to ask is how much of the cost increase they’ll attempt to pass on to their customers,” he said. “They should also be looking at other cost-savings strategies, like modal optimization and carrier/3PL strategy.”
In response to the tariffs, Steve Lamar, President of the American Apparel & Footwear Association, said that as these new tariffs are compounding rapidly, and creating what he called a potentially crushing burden on American businesses and hardworking American families.
“Uncertainty and instability are corrosive, undermining the vitality of our consumer driven economy, and the 3.5 million American jobs created by our industry,” said Lamar. “We look forward to discussions with Administration officials, including U.S. Trade Representative Ambassador Greer and Commerce Secretary Howard Lutnick, on needed guardrails that will allow us to champion smart trade policies. It is vital that our government’s actions be aligned so that they benefit both the crucial exports of American-grown and American-manufactured goods as well as U.S. imports of safe, affordable, and innovative consumer products. Both sides of this trade equation support hundreds of millions of American consumers and workers, and the communities in which they live. We also look to the 119th Congress to assert its constitutionally mandated roles on tariffs to ensure these trade policies can achieve their objectives in a clear manner and to reactivate and renew beneficial trade agreements and trade preference programs that leverage U.S. economic objectives while promoting predictable market access.”
As for ways in which shippers can be prepared for and be ready to address how tariffs can potentially impact the logistics and supply chain operations and processes, there are no shortages of opinions coming from industry stakeholders.
Marc Iampieri, global co-leader of the Logistics & Transportation practice, as well as Partner and Managing Director, for New York-based AlixPartners, a New York-based global consulting firm, told LM that these abrupt tariff actions are certainly disruptive and could be destabilizing to supply chains in certain sectors.
“Many companies we have spoken to about this already have plans in place to diversify suppliers and in some cases customers ahead of these actions,” he said. “Unfortunately, it is very difficult to react overnight and the response now is to try to accelerate some of those moves. There already has been some increased forward buying to try to increase buffer in advance of higher tariffs, and supply chains have been able to absorb that demand with minimal issue…partially due to suppressed overall demand for services.”
And he also noted that his firm believes that for some commodities and, or, industry subsectors, the retaliatory tariffs on exports with have a relatively quick destructive impact to demand and that will require adjustments to the supply chain plan (for shippers).
A recent LM reader survey of 100 freight transportation, logistics, and supply chain stakeholders found that tariffs are not at the top of their priorities. Sixty percent of respondents said they don’t believe tariffs will improve logistics and supply chain operations.
Reasons cited for this include increased costs, disrupted supply chains, inflation risks, the need for shippers to find alternate suppliers, higher production costs leading to reduced demand, and retaliatory tariffs causing supply chain disruptions.
“Tariffs will raise prices for manufacturers and consumers,” one shipper respondent said. “They will disrupt the flow of goods across the Canadian and Mexican borders, making it more difficult to maintain profitability. There are no winners in a ‘Tariff War.’”
However, 40% of respondents believed that tariffs would improve logistics and supply chain operations. Reasons cited included making American-made goods more competitive, bringing more manufacturing back to the U.S., and the potential for increased business volume based on future trade deals with desired trading partners.
“They will help get things into a more aligned, proper order,” one respondent stated. “Remember, [Trump’s] ultimate goal is free trade—or at a minimum, fair trade—and, when needed, leverage trade to improve things like our borders.”
