US President Donald Trump announced that he will officially impose a 25% tariff on imported products from Canada and Mexico on February 1st, citing reasons such as illegal immigration issues, fentanyl inflows into the United States, and the trade deficit between the two countries and the US. Trump said that this tax rate may only be a "bottom line" and may be further raised in the future.

On Thursday (January 30th), when signing the executive order regarding the air crash in the Oval Office of the White House, Trump told reporters, "We will announce tariffs on Canada and Mexico for multiple reasons

He listed three major factors: firstly, a large influx of illegal immigrants into the United States; Secondly, the drug problem, including the influx of fentanyl and other prohibited substances into the United States; Thirdly, the United States has a trade deficit with Canada and Mexico, which means we have provided them with huge subsidies in the form of deficits.

After the news was released, the market immediately reacted. The futures price of West Texas Intermediate (WTI) crude oil climbed above $73 per barrel, as the US dollar recovered from its early decline and hit a intraday high, while the Canadian dollar and Mexican peso both fell. Gains in US treasury bond bond yields narrowed.

Trump also stated that he is still considering whether to exempt oil imports and will make a final decision based on the oil price situation that evening. He emphasized that the United States has abundant oil and timber resources and does not need to rely on supplies from Canada and Mexico. He added, "We don't need their products. We have all the oil and wood we need

The Trump administration's move has sparked strong opposition from Canada and Mexico. Canadian Ambassador to the United States Kirsten Sherman has warned that if US tariffs take effect, Canada will take countermeasures.

She said: "This is not the situation we want, and we do not want to get into a tariff dispute with the United States. This is not good for the people and workers of the two countries." Hillman added that Canada has made efforts on border security issues, including increasing drones and helicopter patrols, to ease the concerns of the United States.

In order to avoid tariff escalation, Canadian Prime Minister Justin Trudeau went to Mar-a-Lago estate for talks with Trump before his inauguration, while Mexican President Claudia Heinbaum also held consultations with Trump, hoping to resolve the trade dispute.

According to US trade statistics, the total trade volume between the United States and Canada reached $699 billion in the first 11 months of 2024, while the total trade volume with Mexico was $776 billion. The Trump administration's tariff measures may have a serious impact on key industries such as automobiles and energy.

As a result, the stock prices of American car manufacturers Ford and General Motors fell after the announcement, wiping out their previous gains.

Trump not only imposed tariffs on North American trading partners, but also plans to continue exerting trade pressure on China. He accused China of failing to fulfill its commitment to prevent fentanyl and related chemicals from flowing into the United States, and warned that the United States would impose tariffs on China as a result.

He said, "China's shipment of fentanyl to the United States has resulted in the deaths of hundreds of thousands of us, so they must pay the price

At the same time, the Trump administration also plans to expand the scope of tariffs to cover industries such as pharmaceuticals, semiconductor chips, steel, aluminum, and copper. These tariffs may apply to multiple countries, including Canada and Mexico. Trump stated that tariffs will help promote the revival of American manufacturing and serve as a source of government revenue.

However, industry analysts warn that tariffs could disrupt global supply chains, increase production costs, and ultimately harm the interests of American businesses and consumers.

With the implementation of the new tariff policy, the relationship between the United States and its two major trading partners is becoming increasingly tense, and the market is facing greater uncertainty, further exacerbating the risk of a global trade war.