Trump to decide US tariff levels on Mexico, Canada as Tuesday deadline looms

Washington | Reuters—U.S. President Donald Trump will decide on Monday what levels of tariffs he will impose early on Tuesday on Canada and Mexico amid last-minute negotiations over border security and efforts to halt the inflow of fentanyl opioids, his commerce secretary said.

Trump has vowed to impose 25 per cent tariffs on all imports from Canada and Mexico, with 10 per cent for Canadian energy. CEOs and economists say the action, covering more than $900 billion worth of annual U.S. imports from its southern and northern neighbors would deal a serious setback to the highly integrated North American economy.

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The tariffs are scheduled to take effect at 12:01 a.m. EST on Tuesday.

Commerce Secretary Howard Lutnick on Sunday signaled that Trump may not impose the full amount of tariffs, saying that the president would determine their exact levels and the tariffs were a “fluid situation.”

On Monday, Lutnick told CNN that Trump and his advisers would be discussing progress made by Canada and Mexico in closing their borders to illegal immigration.

“The Mexicans and the Canadians have done a nice job on the border,” he said, adding that the two countries need to do more to curb fentanyl flows into the U.S. to reduce deaths from the opioid drug.

“The president really cares about saving Americans’ lives, so they’ve got to get the fentanyl down, and that’s really attacking the cartels and getting this down,” Lutnick said.

“So that’s why it’s fluid. The president has to say, ‘I appreciate what you have accomplished, but you haven’t accomplished enough,’ and that’s what we’re going to be talking about all day today,” Lutnick added.

Trump is also expected on Tuesday to raise fentanyl-related tariffs on Chinese imports to 20 per cent from 10 per cent currently, unless Beijing ends fentanyl trafficking into the U.S. Lutnick did not mention any potential changes to these duties, which would affect about $439 billion worth of annual imports.

Senior Canadian and Mexican officials on Friday met with Trump cabinet members to discuss their efforts to secure their borders, but Trump has cited insufficient progress in reducing fentanyl overdose deaths.

Mexico’s response plans

Mexico, after avoiding the first round of Trump’s tariffs by striking a last-minute deal to send thousands of troops to its northern border, has stepped up anti-drug efforts and hinted at new measures on imported Chinese goods.

President Claudia Sheinbaum, in a press conference on Monday, said her government was calm as it awaited Trump’s decision, but that Mexico but will respond if tariffs are imposed.

“We have a plan B, C, D,” Sheinbaum said, without giving any details. She added that coordination with the U.S. on trade and fentanyl trafficking has been “very good.”

According to the Centers for Disease Control and Prevention, 72,776 people died from synthetic opioids in 2023 in the U.S., chiefly from fentanyl.

Navarro: Trump unwavering

White House trade adviser Peter Navarro told CNBC on Monday that he does not see Trump wavering on his tariff agenda, but he did not mention specific levels or scope relative to Canada or Mexico.

He said the inflationary impact from any tariffs would be “second-order small, so I don’t see the president wavering on any of this, because he knows in order to get to a world in which America is strong and prosperous, with real wages going up and (more) factory jobs. This is the path that he’s chosen.”

Trump on Saturday added another trade action to a cascade of tariff announcements over the past month, opening a national security investigation into imports of lumber and wood products that could result in steep tariffs. Canada, already facing 14.5 per cent U.S. tariffs on softwood lumber, would be hit particularly hard.

During the prior week Trump ordered the revival of a tariff probe on countries that levy digital services taxes, proposed fees of up to $1.5 million every time a Chinese-built ship enters a U.S. port, and launched a new tariff investigation into copper imports.

These come in addition to his plans to determine higher U.S. “reciprocal tariffs” to match the tariff rates of other countries and offset their other trade barriers, a move that could hit the European Union hard over the value added taxes charged by EU countries.

But Trump’s “tariffs on steroids” agenda may keep inflation higher and could tip the global economy into recession, warned Desmond Lachman, a senior fellow at the conservative American Enterprise Institute.

Package orders

The White House late on Sunday issued technical orders from Trump related to tariffs on Mexico and Canada, declaring that low-value packages from the two countries cannot enter the U.S. duty-free under the “de minimis” exemption for shipments under $800. The ban will take effect once the Commerce Department determines that adequate screening measures take place, the order said.

Trump on February 4 suspended the de minimis exclusion for low-value Chinese packages, but the U.S. Customs and Border Protection Agency had to pause the suspension because packages were piling up at U.S. airports without a way to screen them.

Fentanyl traffickers have exploited the de minimis package exemption to ship fentanyl and its precursor chemicals into the U.S., and officials say the packages often enter unscreened.

—Additional reporting by Susan Heavey in Washington, Kylie Madry and Ana Isabel Martinez in Mexico City