Published 07:17 IST, February 3rd 2025
Trump Kept His Pledge on Tariffs. Are Americans Ready for a Fallout?
The tariffs span a range of goods, from Canadian oil and lumber to Mexican produce, clothing, liquor, and auto parts, as well as Chinese plastics, textiles, and

Washington: Donald Trump , President of the United States, imposed tariffs on Canada, Mexico, and China, drawing strong criticism for his bold decision. This move, one of Trump’s key promises during his presidential campaign, has already sparked retaliatory actions from Canada and Mexico, raising concerns about a prolonged trade war with vital US trading partners.
In response to the backlash, Trump defended his actions on Truth Social, stating, "Will there be some pain? Yes, maybe (and maybe not!). But we will Make America Great Again, and it will all be worth the price that must be paid."
Trump had previously positioned his economic agenda as a way to lower the cost of living for Americans. However, he has now acknowledged, as many economists predicted, that the tariffs could lead to higher prices and reduced supply in various markets.
Here’s a Breakdown of the Situation:
- Tariffs Impact the US's Top Three Trading Partners: Canada, Mexico & China
Trump declared an economic emergency, imposing a 10 per cent tariff on all imports from China and a 25 per cent tariff on imports from Mexico and Canada. This includes energy products like oil, natural gas, and electricity from Canada, which will face a 10 per cent tax. These tariffs are set to take effect on Tuesday.
The tariffs span a range of goods, from Canadian oil and lumber to Mexican produce, clothing, liquor, and auto parts, as well as Chinese plastics, textiles, and computer chips.
Trump’s order does not provide exceptions for US importers.
Canada is a major supplier of oil to the U.S., sending over 4.3 million barrels daily, a significant portion of the 20 million barrels the U.S. consumes each day. U.S. domestic production is around 13.2 million barrels a day.
- Trump Links Tariffs to Immigration and Drugs, Not Just Economics
Throughout his political career, Trump has focused heavily on U.S. trade deficits and the loss of manufacturing jobs abroad. However, he has now framed the tariffs as leverage to address immigration and the flow of illegal drugs. He blames Canada, Mexico, and China for not doing enough to curb the flow of fentanyl into the U.S. and for contributing to the migration of people across the U.S. border.
“It is my duty as president to ensure the safety of all,” Trump stated in a post on social media.
- The Response From Canada, China, and Mexico
Trump’s tariffs included a warning of further escalation if U.S. trading partners retaliated. Mexico’s President Claudia Sheinbaum quickly imposed retaliatory tariffs, while Canadian Prime Minister Justin Trudeau announced a 25% tariff on up to $155 billion in U.S. imports.
Trudeau urged Canadians to "choose Canadian products" in an apparent call for a boycott of U.S. goods. Several Canadian provinces also moved to remove American alcohol brands from government shelves.
As of Sunday afternoon, China had not yet imposed new tariffs, but its Ministry of Foreign Affairs warned that it would take “necessary countermeasures” to protect its interests, and the Ministry of Commerce indicated it would file a complaint with the World Trade Organization over U.S. actions.
- Consumers Will See the Effects, Even if Businesses Pay the Actual Tariffs
End-line consumers don’t pay tariffs directly. It’s usually whatever company – a foreign-based exporter or U.S.-based importer – is transporting goods across the border. But that adds to the overall cost of getting goods to their final retail stop, and each player in that process is certain to increase their prices as a result.
Gregory Daco, chief economist at the tax and consulting firm EY, calculates the tariffs would increase inflation, which was running at a 2.9% annual rate in December, by 0.4 percentage points this year. Daco projects the U.S. economy, which grew 2.8% last year, would fall by 1.5% this year and 2.1% in 2026.
The Budget Lab at Yale University estimates Trump’s tariffs would cost the average American household $1,000 to $1,200 in annual purchasing power.
- Trump Has Changed His Tune on the Consequences for Consumers
Candidate Trump made sweeping, fantastical promises about the U.S. economy.
For example, he promised to lower grocery prices “immediately” and cut utility bills in half within a year of taking office. He repeatedly hammered the Biden administration as a failure because of inflation and invited the votes of Americans frustrated over a higher cost of living.
Vice President JD Vance, in an interview on Fox News’ “Sunday Morning Futures,” maintained that Trump’s policies would mean “more take-home pay” for U.S. workers.
Trump is now backing off such claims.
“Will there be some pain? Yes, maybe (and maybe not),” Trump wrote Sunday morning on social media. “But we will make America great again, and it will all be worth the price that must be paid.”
The effects reach even to companies and products billed as “made in the U.S.A.” Because sometimes that label means only that a product is assembled or otherwise finished in a U.S. facility but still includes raw materials, parts or packaging from elsewhere.
And as Trump himself often said during the campaign, energy costs — which become transportation costs in the supply chain – also drive consumer pricing. Given Canada’s share of the U.S. energy supply, gas prices could increase, especially in the Midwest, where so much Canadian crude oil is refined.
(With inputs from AP)
Updated 08:47 IST, February 3rd 2025