Tariff War: How Much Trade Does the U.S. Have with Canada, Mexico, and China?
As of today, Tuesday, March 4, the administration of Donald Trump has imposed tariffs on three of the U.S.’s major trading partners: Mexico, Canada, and China.
The tariffs on Mexico and Canada, which were first announced on February 2, were later put on hold for 30 days to allow negotiations between the countries. However, China’s tariffs have been in place since last month’s announcement.
As no agreement materialized between the parties, the tariffs have now taken effect, triggering retaliatory measures from China and Canada, as the world braces for a potential—and perhaps devastating—trade war.
While the initial U.S. tariff on Chinese imports was 10%, an additional 10% came into effect today. Meanwhile, the U.S.’s North American neighbors were hit with a 25% tariff on all imports from Mexico and 25% on most goods from Canada.
Cost of Tariffs Imposed by the U.S. on China, Mexico, and Canada
These three countries make up the U.S.’s largest trading partners, and the imposed tariffs are expected to cost billions of dollars. In fact, trade between the U.S. and these three countries amounts to $1 trillion in goods annually, with Canada, Mexico, and China accounting for a third of all products imported into the U.S.
For the U.S.’s neighbors, the favorable trading relationship they have enjoyed dates back to the 1990s, during the North American Free Trade Agreement (NAFTA). However, that agreement is now under strain due to Trump’s tariffs. In fact, Canada and Mexico alone account for over 28% of total U.S. imports. This is more than the combined U.S. imports from seven other countries, including:
- Germany (4.9%)
- Japan (4.6%)
- Vietnam (4.2%)
- South Korea (4.0%)
- Taiwan (3.6%)
- Ireland (3.2%)
- The U.K. (2.1%)
While Trump’s tariffs signal a shift in economic power, they also highlight the mutual dependence of these countries on the U.S. However, trade is a two-way street. U.S. citizens heavily rely on goods imported from these countries, which are often more affordable, partly due to lower labor costs. In fact, major technological gadgets such as telephones, computers, and even cars are heavily imported into the U.S.
In 2023, for the first time in history, the U.S. imported more products from Mexico than from any other country.
Based on 2023 U.S. trade data, key imports from these countries included:
- Crude petroleum ($165.3 billion) → 68% from Mexico & Canada, 32% from China.
- Cars ($208 billion) → 39% from Mexico & Canada, 61% from China.
- Computers ($103.2 billion) → 38% from China.
- Telephones ($117.1 billion) → 47% from China.
- Car parts & accessories ($85.5 billion) → 41% from Mexico.
- Delivery trucks ($43.5 billion) → 75% from Mexico.
- Insulated wire ($29.7 billion) → 52% from Mexico.
Canada, China, Hit Back With Tariffs. Mexico Expected to Follow
Not surprisingly, all three countries have responded with their own tariffs on U.S. goods.
China has imposed a 15% tariff on imports of chicken, wheat, corn, and cotton from the U.S. Additionally, a 10% tariff has been placed on imports of sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products, according to the country’s finance ministry.
For Canada, a 25% tariff has been imposed on $30 billion worth of U.S. goods starting today, with plans to extend it to $125 billion worth of American goods in 21 days, according to a statement by Prime Minister Justin Trudeau.
“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs. Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term,” Trudeau said in the statement.
Although Mexico has yet to announce retaliatory tariffs, President Claudia Sheinbaum has made it clear that her country will not be bullied by a foreign government. With Mexico already facing stricter immigration policies under the new U.S. administration, Sheinbaum is seeking to boost national confidence and encourage Mexicans to believe more in their country.
