President Donald Trump said that tariffs on imports from Mexico and Canada "will go forward" when a 30-day reprieve expires next week. The news, which came in the final 40 minutes of trading on Monday, dragged the S&P 500 lower.
That's the first of four looming Trump tariff deadlines over the next six weeks. Trump announced the action at a White House news conference, saying that the U.S. has "been taken advantage of" by trading partners, but "we're going to make up a lot of territory."
Trump Tariffs Could Hit March 4
On Feb. 3, Trump announced a 30-day delay in tariffs targeting all imports from Mexico and Canada with a 25% rate, except for a 10% rate on energy imports from Canada.
The delay, which runs to March 4, followed commitments by Mexico and Canada to stop drug smuggling across the border, part of Trump's justification in ordering the tariffs via the International Emergency Economic Powers Act. Yet the White House news release justified the tariffs on much different grounds: "Tariffs strengthen the American economy, raise wages, and create jobs."
Mexico and Canada together accounted for $918.5 billion in U.S. goods imports in 2024, or about 28% of the total. The integration of North American economies under NAFTA and then the renegotiated U.S.-Mexico-Canada Agreement under President Trump means that some goods cross the border more than once, before and after finished assembly.
The USMCA deal set new quotas of 2.6 million passenger vehicle imports to the U.S. apiece for Canada and Mexico. Above those levels, vehicle imports can't qualify for duty-free treatment. Yet the Trump tariffs, if they take effect, will hit all imports. Both Canada and Mexico are heading for recession if the tariffs are applied, economists say.
Ford Motor CEO Jim Farley told investors recently that 25% tariffs on imports from Canada and Mexico "would blow a hole in the U.S. industry that we've never seen."
Trump Tariffs: Steel And Aluminum
Trump signed an executive order on Feb. 10 that will subject all steel and aluminum imports, roughly $50 billion worth, to 25% tariffs, effective March 12.
Trump already imposed a 25% tariff on steel imports in 2018. However, most steel imports to the U.S. are shielded from this tax through a series of subsequent agreements with trading partners. Meanwhile the current 10% tax on aluminum imports is set to jump to 25%.
Trump Reciprocal Tariffs
Trump signed an executive order last Thursday designed to level the playing field with trade partners via what he terms "reciprocal" tariffs. In theory, the approach could offer other countries a way of avoiding the tariffs by simply bringing down their own trade barriers to U.S. products.
However, Trump doesn't want the tax to only reflect the import taxes other countries slap on imports from the U.S. Other factors, including government subsidies, value-added taxes and currency valuations will also factor into the U.S. tariff rate.
Trump Tariffs To Target These Industries
Trump said last week that tariffs of 25% could apply as soon as April 2 to imports from three industries that are major contributors to the U.S. trade deficit: pharmaceuticals, autos and semiconductors.
S&P 500
The S&P 500 weakened in the final 40 minutes of trading on Monday, after President Trump's update, going from near the flat line to a 0.5% loss. That extended the S&P 500 losing streak to three sessions, after touching a record high on Feb. 19.
The S&P 500 closed just below its 50-day moving average, finishing below the key support line for the first time in a month.
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