With Donald Trump set to take office as the 47th President of the United States on the 26th of January 2025, North America appears to have reached a critical junction with tariff policy occupying a pivotal position in multilateral economic relations.
These measures, alongside Trump's proposed immigration crackdowns, signal a shift toward an era of heightened economic nationalism, challenging the foundations of regional integration and testing the resilience of North America’s interdependent economies.
Mexico, China and Canada together account for more than a third of the goods and services both imported and exported by the US, supporting tens of millions of American jobs. About 75% of Canada’s exports go to the US, and Canadian imports to the US are valued at US$430bn, according to the United Nations Comtrade database on international trade. Mexico is the top trading partner of the US with imports valued at US$480bn.
President-elect Trump asserted on Truth Social that one of his first executive orders would be to hit Mexico and Canada with a blanket 25% tariff. “This Tariff will remain in effect until such time as Drugs, in particular Fentanyl and all Illegal Aliens stop this Invasion of our Country!” he said in the post.
Trudeau’s Defensive Stance
Amidst declining approval rates further exacerbated by his handling of tariffs, Canadian Prime Minister Justin Trudeau has swiftly met with President-elect Trump at his Mar-a-Lago estate in an attempt to mitigate the tariffs.
This comes as Canada’s overreliance on U.S. trade has become a persistent vulnerability in its economic strategy with approximately 75% of Canadian exports heading to the United States, creating significant sensitivity to U.S. trade policies.
In response to Trump’s aggressive tariffs during his first presidency—and threats of more—Trudeau’s administration implemented retaliatory measures totaling CAD 16.6 billion, targeting goods like steel, aluminum, and agricultural products.
Canada remains the largest foreign supplier of steel, aluminum and uranium to the US. Additionally, it has 34 critical minerals and metals of interest to the Pentagon, which is actively investing in these resources to bolster national security and reduce reliance on adversarial nations.
However, these measures have been met with criticism domestically. Canadian farmers, already grappling with high input costs due to global inflation, have faced increased prices for US machinery and fertilizers. A Canadian Federation of Agriculture report found that tariffs have added 12% to farmers’ operational costs, with the dairy sector hit hardest.
The Trudeau-Trump meeting has also invited questions of whether it violated a 225-year-old US law. The Logan Act, enacted by the US in 1799, prohibits private US citizens from engaging in talks or negotiations with foreign governments without the permission of the US government.
Since its enactment, there have only been two indictments and no convictions. Recently, it was cited in the denial of a request for a face-to-face meeting with Japanese Prime Minister Shigeru Ishiba.
Trump has potentially previously violated this act by hosting Hungarian Prime Minister Viktor Orbán and Israeli Prime Minister Benjamin Netanyahu in July. Speaking with reporters on Monday aboard Air Force One, White House national security communications adviser John Kirby was asked about Trudeau’s meeting with Trump and whether Trudeau had also spoken to Biden. Kirby said Biden had not spoken with Trudeau since the meeting with Trump and did not raise concerns about the meeting.
Renan Levine, who teaches US politics at the University of Toronto, agrees Trump has no reason to fear prosecution for violating the Logan Act, according to CBC. "It's a possible violation of a law that is rarely enforced and will certainly not be enforced vis-a-vis Trump," he said.
A possible violation of the Logan Act pales in comparison to other accusations against Trump, he said, citing his decision to keep presidential documents at Mar-a-Lago and his role in the January 6th attack on the Capitol in 2021. Plus, it would be hard to argue that discussing issues like fentanyl trafficking runs contrary to the US government's position or its interests, Levine added. Regardless, the law is in the books and can be enforced, he adds.
Sheinbaum’s Pragmatic Pushback
Meanwhile, Mexico’s President Claudia Sheinbaum has sought to clarify details of a conversation she had with US President-elect Donald Trump after the two leaders offered differing accounts of the call. Trump has claimed that Sheinbaum had "agreed to stop Migration through Mexico, and into the United States, effectively closing our Southern Border". Sheinbaum has since stated that she had merely reiterated Mexico's position, which she said was "not to close borders but to build bridges between governments and people".
She also clarified that the call was not about tariffs specifically but reasons Trump has touted for the tariffs–drug trade and illegal immigration–were discussed. Ahead of the call, Sheinbaum reacted combatively to the announcement of the tariffs, vowing to retaliate with increased tariffs if the US prompted a trade war.
Her administration has focused on safeguarding Mexico’s economic interests while reducing dependency on the US as bilateral trade between Mexico and the US reached US$780 billion in 2023. Consequently, Sheinbaum’s government is also actively pursuing agreements with other nations, including a proposed free trade agreement with Brazil and expanded agricultural exports to Europe and Asia.
Mexico is a leading exporter of agricultural goods like avocados, tomatoes, and peppers. The country’s agriculture ministry reported a 15% growth in non-US exports in 2024, partially offsetting losses from US tariffs. Nonetheless, any disruption to US-Mexico trade could jeopardize the livelihoods of millions of Mexican farmers reliant on the US market.
Canadian and Mexican Ties
Sheinbaum and Trudeau have already held multiple discussions to address Trump’s tariff policies. In a joint statement, the two leaders called for a united front against “unilateral and protectionist trade measures,” underscoring their shared commitment to multilateralism. However, Trudeau’s recent remarks during and after his dinner with Trump have not gone unnoticed in Mexico, further straining their bilateral ties.
Canadian officials quickly sought to distance their country's border issues from those of Mexico, arguing that drug smuggling and unlawful crossings at the southern border were much higher, and that Mexico served as a "backdoor" for Chinese investment into North America.
Sheinbaum responded in a statement to the Associated Press this week asserting that “Mexico must be respected, especially by its trading partners”. She added that Canada had its own social problems with fentanyl use, adding that the country “could only wish they had the cultural riches Mexico has”.
USMCA Trade Agreement
Trump's threatened new tariffs would also appear to violate the terms of the US-Mexico-Canada Agreement (USMCA) on trade. The deal, which Trump himself signed into law took effect in 2020 and continued the largely duty-free trade between the three countries.
During the contentious negotiations that led to the United States-Mexico-Canada Agreement (USMCA), both Canada and the United States imposed sanctions on each other's products. These measures were part of the broader trade tensions stemming from Trump's aggressive tariff policies and demands during the talks. Trump will have the opportunity to renegotiate the agreement in 2026, when a "sunset" provision will force either a withdrawal or talks on changes to the pact.
Yet, Trump’s willingness to ignore US commitments under USMCA will hamper his administration’s ability to make progress on other key challenges. Threatening 25% tariffs on Mexico and Canada has sent a signal globally that governments cannot rely on agreements with Trump—even ones he negotiated.
In response, governments will focus on one-off deals to address specific US concerns, while avoiding getting drawn into agreements that are based on longer-term cooperation. This will make it more difficult to address US economic and security concerns with China, which will require building more political, challenging, complex, and longer-term cooperation with other countries in areas such as export controls, investment screening, and industrial subsidies.
Trump’s sweeping 25% tariffs on Mexico and Canada also threaten to destabilize North America’s trade ecosystem, jeopardizing industries like agriculture while straining USMCA commitments. Trudeau’s defensive outreach signals Canada’s vulnerability, while Sheinbaum vows retaliation, pushing for diversified trade.
These tariffs may disrupt North American trade, impacting industries reliant on integrated supply chains, and potentially increasing consumer prices. As economic tensions rise, the region faces fractured diplomacy and a precarious path forward in trade and security.
Disclaimer
Any facts, views or opinions are not intended to malign and/or disrespect any religion, group, club, organisation, company, or individual.
This article published on this website is solely representative of the author. Neither the editorial staff nor the organisation (Political Pandora) are responsible for the content.
All illustrations in this piece, if any, are original works created exclusively by the Design Department of Political Pandora.
These illustrations are protected and are not available for replication, reproduction, or redistribution in any form without explicit written consent from Political Pandora. Unauthorized use, including but not limited to copying, modifying, or redistributing, is strictly prohibited.
Photographs in this particular article, if any, are taken from external sources and are not a property of Political Pandora. The use of these images are not meant for commercial purposes.
While we strive to present only reliable and accurate information, should you believe that any information present is incorrect or needs to be edited, please feel free to contact us.
Keywords:
Donald Trump Tariffs, US-Canada Trade, US-Mexico Trade, North American Economy, Trade Protectionism Policies, USMCA Trade Agreement, Canada Export Dependency, Mexico Retaliatory Tariffs, Trudeau Trade Strategy, Sheinbaum Economic Policies, Tariff Impact On Agriculture, Immigration, Critical Minerals Trade, The Logan Act, Fentanyl Trade Policy, Economic Nationalism Trends.
Comments