On January 21, 2025, US President Donald Trump announced plans to combat illegal immigration and impose heavy tariffs on imports from Canada and Mexico. In response, Mexican President Claudia Sheinbaum asserted her country's commitment to sovereignty and independence.
During his first day in office, Trump indicated intentions to deploy troops to the Mexican border to address illegal immigration and reiterated threats of punitive tariffs of 25% on imports from both neighboring countries, potentially effective from February 1.
Sheinbaum emphasized the importance of maintaining a level-headed approach, referencing existing agreements and stating, 'The people of Mexico can be assured that we will always defend our sovereignty and independence.' She rejected the proposed renaming of the Gulf of Mexico to 'Gulf of America,' asserting its original name.
Canadian Prime Minister Justin Trudeau promised a strong response to Trump's trade threats, which could destabilize Canada's economy. Trudeau stated, 'Canada will respond, and all options are on the table,' emphasizing a measured yet robust reaction to match any US tariffs dollar for dollar.
Both Canada and Mexico are protected under the United States-Mexico-Canada Agreement (USMCA), which is set for review in 2026. The agreement, established during Trump's first term, aimed to enhance labor rights in Mexico.
Mexico has overtaken China as the largest trading partner of the US in 2023, with a trade deficit of $150 billion recorded that year. Trade conflicts among the three nations have escalated, involving issues such as genetically modified corn and Canadian dairy products.
Trudeau warned that a trade war would have significant costs for the US, while also impacting Canadians. Economists suggest that such a conflict could push Canada into recession, given that approximately 75% of its exports go to the US, primarily in energy and automotive sectors.
Estimates from Scotiabank indicate that disruptions in bilateral trade could reduce Canada's GDP by over 5%, significantly increase unemployment, and drive inflation higher.