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CNN
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President Donald Trump announced extraordinary new tariffs on Mexico, Canada and China — signing the long-promised economic policy at his Mar-a-Lago club on Saturday. The Trump administration said tariffs are aimed at curbing the flow of drugs and undocumented immigrants into America, but they potentially risk substantial price increases for American consumers across a wide array of common goods.

The new policy represents a reversal of virtually duty-free trade between the three North American nations that’s existed for several years — and an expansion of a frosty trade war between China and the United States that has escalated over the course of the past two administrations.

As Trump has repeatedly promised over the past several months, the tariffs will amount to a significant 25% duty on all imports from Mexico and most goods from Canada and a 10% tariff on Chinese goods imported into the United States. Although Trump administration officials said Saturday the tariffs were designed to stop the flow of fentanyl and undocumented immigrants, they gave no specific benchmark for the new import taxes to be lifted — other than the cessation of the drugs and undocumented immigrants coming into the country.

The tariffs are expected to invite retaliation, perhaps igniting a trade war that could significantly damage the economies of the targeted countries and the United States. In anticipation of that, Trump’s executive action includes a clause that allows the president to expand the tariffs if a country imposes new tariffs on the United States.

Notably, the tariffs included an important carve-out — the tariff on Canadian energy products will be 10%. Many Americans rely on Canadian energy products, including oil, electricity, natural gas, for fuel and home heating. The cost of those items could rise when the tariffs are put in place.

To put the tariffs in place, Trump in his executive action declared a national economic emergency, invoking the International Emergency Economic Powers Act, known as “IEEPA,” which unilaterally authorizes a president to manage imports during a national emergency. The tariffs are set to go into effect on Tuesday morning at 12:01 am ET.

“Today, I have implemented a 25% Tariff on Imports from Mexico and Canada (10% on Canadian Energy), and a 10% additional Tariff on China,” Trump said in a message posted to Truth Social on Saturday. “This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl. We need to protect Americans, and it is my duty as President to ensure the safety of all.”

Saturday’s tariffs amount to a starting gun on what could escalate into a global trade war, perhaps inviting retaliation from Mexico, Canada and China in the form of higher tariffs on goods that the United States exports to those countries. That could lead to potentially much higher costs, disrupted supply chains and the loss of jobs. In a call with reporters Saturday, a Trump administration official said any retaliation from Mexico, China or Canada would likely result in even higher tariffs for that country. Even Trump acknowledged the potential for adverse consequences on American consumers.

“There could be some temporary, short-term disruption, and people will understand that,” Trump said Friday when pressed by reporters on the cost of tariffs being passed on to importers, and, by extension, consumers. “But the tariffs are going to make us very rich and very strong — and we’re going to treat other countries very fairly.”

Canadian Prime Minister Justin Trudeau, in anticipation of Trump’s actions, has said previously that Canada would retaliate forcefully and swiftly if the United States imposed tariffs. The country’s trade representatives met with Trump administration officials as recently as Friday in an attempt to stave off the tariffs.

Jonathan Wilkinson, Canada’s natural resources minister, said in a post on X that Canada did “nothing to provoke tariffs” from the United States but is “prepared and ready to fight” for its residents.

Tariffs are one of the few policies Trump has consistently supported for decades, a rare through-line from his days as a New York developer to his time in public office (another is immigration). As a candidate, he swore he’d use tariffs — “the most beautiful word in the dictionary” — to wield US leverage abroad.

Why those countries? Key trading partners

Mexico, China and Canada are the United States’ three largest trade partners.

And in 2023, Mexico overtook China as the top nation exporting goods to the US, marking the first time in two decades China was not the top-ranking exporter. Tariffs the first Trump administration put in place, which the Biden administration largely maintained, have negatively impacted the amount of goods the US imports from China. Mexican and Canadian goods have been imported in the US virtually duty-free as a result of the United States-Mexico-Canada Agreement, that Trump negotiated with America’s bordering nations during his first administration.

Mexico maintained that top position last year as well, exporting $467 billion worth of goods to the US, followed by China and Canada, which exported $401 billion and $377 billion worth of goods, respectively.

That’s according to Commerce Department figures from last year through November, the most recent month of available data. Collectively, the three countries accounted for 42% of the nearly $3 trillion worth of goods the US imported worldwide last year.

Canada was the top country the US exported goods to last year, valued at $322 billion, followed by Mexico and China, which received $309 billion and $131 billion worth of goods from the US, respectively. US exports to the three countries accounted for over 40% of the $1.9 trillion worth of goods the US exported globally last year.

CNN’s Elisabeth Buchwald, Matt Egan, Chris Isidore and Alicia Wallace contributed to this report.

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