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Trump vows 25% tariffs on goods from Mexico and Canada

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Action to curb fentanyl, immigration may earn reprieve

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Trump also threatening 10% duties on Chinese imports

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Emergency powers act expects to back Trump's new tariffs

By David Lawder and Andrea Shalal

WASHINGTON, Jan 31 (Reuters) - Companies, consumers and

farmers across North America braced on Friday for U.S. President

Donald Trump to impose 25% tariffs on Canadian and Mexican

imports within hours, moves that could disrupt nearly $1.6

trillion in annual trade.

Trump has set a Saturday deadline to impose the punitive

duties over his demands that Canada and Mexico take stronger

action to halt the flow of illegal immigrants and the deadly

opioid fentanyl and precursor chemicals into the U.S.

Trump said on Thursday he still is considering an additional

10% tariff on Chinese imports to punish Beijing for its part.

Industry groups were furiously seeking any scrap of

information on how Trump plans to implement the tariffs --

whether he would impose the full 25% with immediate effect, or

announce them and delay their implementation to allow some time

for negotiations over steps that the countries could take.

Even immediate imposition would require two to three weeks

of public notice before U.S. Customs and Border Protection could

begin collections, based on past tariff actions.

Trump said on Thursday that he would soon decide whether to

apply the tariffs to imports of Canadian and Mexican oil, an

indication that he may be concerned about their impact on

gasoline prices. Crude oil is the top U.S. import from Canada

and among the top five from Mexico, according to U.S. Census

Bureau data.

Two sources familiar with the matter said that Trump was

expected to invoke the International Emergency Economic Powers

Act (IEEPA) as the legal basis for the tariffs, declaring a

national emergency over fentanyl overdoses that killed nearly

75,000 Americans in 2023 and illegal immigration.

The statute enacted in 1977 and modified after the 9/11

attacks in 2001 gives the president broad powers to impose

economic sanctions in a crisis.

Among the trade law tools at Trump's disposal, IEEPA would

give him the fastest path to imposing broad tariffs, as others

require lengthy investigations by the Commerce Department or the

U.S. Trade Representative's office.

Trump's nominees to run those agencies, Wall Street CEO

Howard Lutnick and trade lawyer Jamieson Greer, have not been

confirmed by the U.S. Senate. Trump used IEEPA to back up a 2019

tariff threat against Mexico over border issues.

MAJOR DISRUPTION

Imposing the duties would tear up a 30-year free trade

system that has built a highly integrated North American

economy, with auto parts sometimes crossing borders several

times before final assembly.

Economists and business executives have warned that the

tariffs would spark major increases in the prices of imports

such as aluminum and lumber from Canada, fruits, vegetables,

beer and electronics from Mexico and motor vehicles from both

countries.

Tariffs are paid by firms that import goods and pass the

costs on to consumers or accept lower profits, economists say.

"President Trump's tariffs will tax America first," said

Matthew Holmes, public policy chief at the Canadian Chamber of

Commerce. "From higher costs at the pumps, grocery stores and

online checkout, tariffs cascade through the economy and end up

hurting consumers and businesses on both sides of the border.

This is a lose-lose."

Canada has drawn up detailed targets for immediate tariff

retaliation, including duties on orange juice from Florida,

Trump's adopted home state, a source familiar with the plan

said. Canada has a broader list of targets that could reach

C$150 billion worth of U.S. imports, but would hold public

consultations before acting, the source said.

Canada's energy and national resources minister, Jonathan

Wilkinson, said Canada's response would focus on products that

hurt Americans more than Canadians.

During Trump's first term, China targeted U.S. soybeans and

other farm products, while the European Union hit iconic

American products including bourbon whiskey and Harley-Davidson ( HOG )

motorcycles.

Mexican President Claudia Sheinbaum has said Mexico also

would retaliate, arguing that Trump's tariffs would cost 400,000

U.S. jobs and drive up prices for U.S. consumers.

But more recently, Sheinbaum has publicly doubted that Trump

will follow through on his pledge to impose the tariffs, saying:

"We don't believe it will happen, honestly."

Some of that complacency may stem from Trump's 10-hour trade

war of words on Sunday with Colombian President Gustavo Petro,

threatening the South American country with 25% tariffs over its

refusal to allow U.S. military flights loaded with Colombian

deportees. The crisis ended when Petro agreed to accept the

flights.

China has been more circumspect about its retaliation plans.

Liu Pengyu, a spokesperson for China's embassy in Washington,

emphasized China's cooperation with the U.S. on curbing fentanyl

trafficking and said he hopes the U.S. "will not take China's

goodwill for granted."

A U.S. trade group executive, speaking on condition of

anonymity, said that recent comments from Trump indicating some

progress on fentanyl and immigration concerns indicated that

there was a good chance that tariffs would be announced but

suspended, but added that Trump may need to back his threats

with action.

"If they keep threatening and then don't put them in place,

they're going to lose credibility," the executive said.