President Donald Trump expressed dissatisfaction with the financial burden on Americans he attributes to the 2020 U.S.-Mexico-Canada Agreement (USMCA), a trade agreement he himself endorsed and previously commended.
In a White House press briefing on Monday, Feb. 24, 2025, Trump declared that a previously postponed 25% tariff on all Canadian and Mexican goods would start next week, aiming to rectify issues with the USMCA. In his address, the president seemed to critique the trade policy of his own administration.
“I mean, who can blame them if they made these great deals with the United States, took advantage of the United States on manufacturing?” Trump stated. “On just about anything, every aspect you can imagine, they took advantage.”
Further, the president questioned the logic behind such arrangements, seemingly oblivious that he was criticizing a deal he personally advocated. “I look at some of these agreements, I’d read them at night, and I’d say, ‘Who would ever sign a thing like this?’ So the tariffs will go forward, yes, and we’re gonna make up a lot of territory. All we want is reciprocal. We want reciprocity,” Trump continued.
This marks a significant shift from Trump’s earlier stance on the USMCA. In 2020, he extolled it as the “best agreement we’ve ever made” and credited it with superseding the “nightmare” North American Free Trade Agreement (NAFTA) ratified under former President Bill Clinton, which Trump labeled the “worst trade deal ever made.” During his 2016 presidential campaign against former Secretary of State Hillary Clinton, Trump routinely denounced NAFTA and attributed it to her husband’s actions.
Originally announced on February 1, 2025, the tariffs had been delayed for a month following discussions with Canadian and Mexican representatives. However, Trump has now affirmed that they will be effective on March 4, 2025. The measure imposes a 25% tariff on most imports from Canada and Mexico, except for Canadian energy exports, which will face a 10% tariff. Chinese imports will also be subject to an additional 10% tariff. The White House has defended this policy under the International Emergency Economic Powers Act (IEEPA), citing concerns over fentanyl smuggling and undocumented migration.
Economic evaluations indicate the tariffs could have significant repercussions for all three countries. According to the Brookings Institution, they could decrease U.S. GDP growth by 0.25 to 0.3 percentage points, resulting in an economic output loss of between $45 billion and $75 billion. The automotive and manufacturing industries are expected to be particularly impacted, with increased expenses on imported components likely leading to higher consumer prices. If enforced, retaliatory tariffs from Canada and Mexico could intensify these effects.
The tariffs could result in higher prices on essential goods for American households. Estimates suggest a potential additional financial load of $800 per U.S. household due to the Canadian and Mexican tariffs, plus an extra $172 from tariffs on Chinese imports. Housing materials, automobiles, and energy costs are also expected to increase.
The tariff announcement coincided with a significant political transition in Canada. Prime Minister Justin Trudeau announced his resignation on January 6, with the Liberal Party due to select a new leader on March 9. This leadership change has introduced unpredictability into Canada’s approach to trade discussions.
Trudeau’s administration had been involved in talks with the U.S. to prevent the tariffs. Canadian officials had also hinted at potential retaliatory actions, including counter-tariffs on U.S. agricultural products, steel, and aluminum. However, with Trudeau stepping down, the approach of the incoming Canadian leadership remains uncertain.
Mexico has also been negotiating to stave off the tariffs but has yet to strike a deal with the Trump administration. Mexican officials have contended that the tariffs infringe on the USMCA, which replaced NAFTA in 2020. While the agreement includes review mechanisms, U.S. officials argue that national security concerns provide legal justification for the tariffs under IEEPA.
Mexico has indicated potential counteractions, including restrictions on American agricultural exports. Experts caution that further trade disruptions could have widespread economic consequences as Mexico has evolved into the United States’ largest trading partner.
The tariff decision raises broader concerns about the future of USMCA, which is due for its first significant review in 2026. The deal increased North American content requirements for automobiles and enforced stricter labor standards, measures that Trump had previously applauded. However, the administration has since proposed that further revisions may be required to safeguard U.S. manufacturing.
While the White House insists that the tariffs are designed to rectify trade imbalances, economists caution they could hinder North American economic integration. The tariffs might also challenge the long-term sustainability of USMCA, with Canada and Mexico contemplating legal recourse under dispute resolution mechanisms incorporated into the agreement.
With the March 4 deadline looming, business groups and policymakers continue to assess the impact of the tariffs and the potential for last-minute negotiations. For now, the Trump administration remains resolute in enforcing the new trade measures, signaling a significant pivot in U.S. economic policy towards its closest trading partners.
