by David J. Lynch (c) 2025 , The Washington Post
President Donald Trump said Monday that tariffs on goods from Mexico and Canada would go into effect tomorrow, ending a month-long delay that saw both U.S. neighbors scramble unsuccessfully to head off the punishing trade action and sending stock prices into a swift decline.
On Wall Street, the Dow Jones Industrial Average closed down around 1.5 percent. The broader S&P 500 index fell nearly 2 percent. Both market measures are now in the red since Trump’s election win.
Imposing tariffs on everything Americans buy from Mexico and Canada also represents an extraordinary political gamble by a president who was returned to power by voters angered over years of high inflation. The new import taxes are likely to raise the market prices of Mexican tequila, beer and avocados, and Canadian crude oil and lumber, testing consumer patience with the president’s approach.
Trump’s announcement is designed to encourage manufacturers to return to the United States after a generation of liberalized trade and outsourcing contributed to the loss of 4.5 million manufacturing jobs since the mid-1990s. Most economists insist that automation was responsible for most of that decline, and they credit freer trade with delivering years of low inflation and wider product choice for American consumers.
But Trump, a globalization critic since the 1980s, when Japan was the rising global economic star, has no patience for such views. In slapping a 25 percent tariff, or tax, on products from Canada and Mexico, he upended the North American trade deal that he negotiated during his first term. Under its provisions, most products pass between the United States, Canada and Mexico without incurring a duty.
“Tomorrow, tariffs – 25 percent on Canada and 25 percent on Mexico. And that’ll start. So they’re going to have to have a tariff. So what they have to do is build their car plants frankly and other things in the United States, in which case they have no tariffs,” the president told reporters.
The president’s comments followed earlier suggestions by Commerce Secretary Howard Lutnick that he might opt to impose less onerous import taxes.
Trump announced 25 percent tariffs on goods from Canada and Mexico – and a related 10 percent tax on Chinese products – on Feb. 1, citing an influx of unauthorized migrants from the U.S. neighbors and blaming all three countries for the nation’s fentanyl epidemic.
During the reprieve, Mexico and Canada have taken steps to strengthen border enforcement and surveillance.
“He knows they’ve done a good job on the border. They haven’t done enough on fentanyl. Let’s see how the president weighs that today,” Lutnick told CNN on Monday. “He’s going to decide this afternoon and tomorrow we’re going to put out those tariffs.”
The comments came amid signs that Washington’s perpetual waiting game over Trump’s tariff plans is beginning to sap the economy’s forward momentum. A closely watched gauge of manufacturing activity for February showed a decline in activity, as uncertainty froze business decision-making.
Factories experienced “the first operational shock of the new administration’s tariff policy,” said Timothy Fiore, chair of the Institute for Supply Management’s manufacturing survey committee.
The ISM Manufacturing Purchasing Managers Index for February was 50.3, down from 50.9 the month before, and below Wall Street’s expectations. Input prices rose at their fastest pace since mid-2022, when consumer price inflation was at a 40-year high.
“Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery stoppages and manufacturing inventory impacts,” Fiore said. “Although tariffs do not go into force until mid-March, spot commodity prices have already risen about 20 percent.”
In midafternoon trading Monday, the Dow was down more than 1.5 percent.
As the president deliberated, analysts and executives tried to read the administration’s tea leaves.
Many importers have refrained from rearranging their supply chains while they wait for a clearer signal from the White House.
“For our customers, they’re not making a lot of changes right now because there’s a lot of uncertainty about what’s next and what may happen,” said Brian Bourke, global chief commercial officer for SEKO Logistics, which handles cross-border trade for importers.
The president, in a post Sunday on his social media site Truth Social, crowed about the improved border situation. “ILLEGAL BORDER CROSSINGS LAST MONTH WERE THE LOWEST EVER RECORDED. THANK YOU!!!” he wrote.
Trump’s post, coupled with Lutnick’s comments, appeared to set the stage for the White House to declare at least a partial victory and dial down any planned trade move. Last week, the president said the tariffs would go ahead “as scheduled” on Tuesday. But given his history of threatening trade moves before pulling back, that did not end the doubts.
“If the signals we are seeing are correct, there could be a further postponement, or potentially a reduction from the proposed level of 25 percent. As is usual with President Trump, we will be kept guessing until the last minute,” said Ron Baumgarten of BakerHostetler, who was a trade official in Trump’s first term.
In Mexico City, Mexican President Claudia Sheinbaum, speaking before Trump’s remarks, struck an upbeat note.
“The meetings with the United States went very well, there’s permanent communication with the different departments – both on security and trade – and we’re going to wait and see what happens. In this, we have to maintain calm, serenity and patience,” she said. She added: “We have Plan A, Plan B, Plan C, Plan D, so we’ll wait to see what happens today.”
Since taking office six weeks ago, Trump has threatened or imposed tariffs on the top three U.S. trading partners; commodities such as steel, aluminum and copper; and products like pharmaceuticals, automobiles and semiconductors.
The broad sweep of the president’s plan to increase import taxes goes far beyond what he did in his first term, when new tariffs were mostly levied on goods from China.
The Canadian government has said that it plans to retaliate with levies on as much as $107 billion worth of U.S. goods, including oranges from Florida, motorcycles from Pennsylvania and home appliances from Ohio. The goal is in part to maximize pain in swing states or those home to Trump allies. Additional measures, such as imposing taxes on energy exports, remain on the table, Canadian officials have said.
“Businesses on both sides of the border have already been damaged by the uncertainty coming from President Trump’s drip-drip-drip of tariff threats,” Matthew Holmes, executive vice president at the Canadian Chamber of Commerce, said in a statement. “We have no reason to expect this will change any time soon. Whether it’s tomorrow, next week, or in April, there has already been damage to the relationship and to our economies.”
– – –
Mary Beth Sheridan in Mexico City and Amanda Coletta in Toronto contributed to this report.
