Trump’s Tariffs Start Consequential Trade War with Canada, Mexico

Prime Minister Justin Trudeau’s press conference plays on the floor at the New York Stock Exchange on March 4, 2025 (Photo: AP Photo/Seth Wenig)

Last week, President Trump re-introduced tariffs, 25 percent on both Canada and Mexico, fulfilling a key campaign promise. Just one day after these tariffs took effect, however, the president backtracked, saying he would give the two nations exemptions until April 2, 2025. The president commented that delaying the tariffs was a temporary step, adding that this exemption was a one-time decision. 

These tariffs are meant to force Canada and Mexico to crack down on fentanyl trafficking and illegal immigration. Since the president first announced that these measures would be taken, the stock market has proven to be quite volatile. At its opening on Monday morning, the S&P 500 was down 1.9 percent, the Dow Jones was down 0.9 percent, and the Nasdaq composite was down 3 percent. This volatility comes alongside other signals of a weakening American economy, such as the Federal Reserve Bank of Atlanta’s collection of real-time indicators, which shows a significant drop in Real GDP since the end of February.

Before President Trump rescinded his tariffs on Canadian and Mexican goods, Canadian Prime Minister Justin Trudeau introduced retaliatory tariffs on the United States. Despite President Trump’s delay, Canada’s tariffs will remain.

They have already removed American alcohol from their shelves, and in the coming weeks, the Canadian government plans to introduce tariffs on other American goods like electric vehicles, steel, fruits and vegetables, and meat. Doug Ford, Premier of Ontario, said, “The only thing that’s certain today is more uncertainty. A pause on some tariffs means nothing. Until President Trump removes the threat of tariffs for good, we will be relentless.” In the coming weeks, Ontario plans to charge 25 percent more for the electricity it provides to multiple major American cities.

Trump addresses a joint session of congress, where he unveiled his plan for increased tariffs on Canada and Mexico starting April 2, 2025 (Photo: AP Photo/Ben Curtis)

Trump seems to draw inspiration from the Gilded Age, a period of high tariffs in American history when the rich—figures like John D. Rockefeller—were obscenely rich, and the majority of Americans were in poverty. This was also an era of politics where these wealthy individuals had significant political power despite their lack of government office. Indicating that he wishes to recreate this era, the president said, “[The United States was] at [its] richest from 1870 to 1913. That’s when we were a tariff country.” However, it is important to note that the global economy today is not what it was in the Gilded Age; there is more global interdependence today than there was in the late 1800s. 

This makes tariffs of this size more harmful in the 21st century and the consequences are evident in the volatility of the stock market. Investors are afraid to invest. Economists and investment bankers believe that these policies will lead to inflation sometime soon. According to these specialists, all signs point to a recession. 

When asked about a potential recession in a Fox News interview, the president said, “I hate to predict things like that. There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing.” He also added, “It takes a little time, but I think it should be great for us.”

While only time will tell whether his tariffs will be “great” or not, this trade war will significantly impact the U.S. economy, as well as that of its allies to the north and south.