UPDATE: Canadian Prime Minister Justin Trudeau said President Donald Trump's threatened tariffs would be delayed for at least 30 days after Canada agreed to send more enforcement to the U.S. border. Latest developments here.
Original reporting continues below.
Despite President Donald Trump holding off on his tariff threats against Mexico for one more month, tariffs against Canada and China are still slated to go into effect Tuesday.
Why is he targeting Canada and what could that mean for you?
The moves fulfill certain campaign promises but also have roiled stock markets and supply chains, while straining relations with the country's North American neighbors and the world's second-largest economy.
Unlike during the 2024 campaign, when Trump billed his economic agenda as guaranteed to reduce the cost of living for Americans, the Republican president now is acknowledging what many economists have long forecasted: that the levies could yield higher prices and lower supplies across the market.
Here's a look at what to expect:
Politics
What are tariffs?
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In the U.S., tariffs aim to discourage companies importing goods from places like China by making them pay more for the items they are trying ship in.
They are typically charged as a percentage of the price a buyer pays a foreign seller. In the United States, tariffs are collected by Customs and Border Protection agents at 328 ports of entry across the country.
Where is Trump imposing tariffs?
Trump initially declared an economic emergency to place duties of 10% on all imports from China and 25% on imports from Mexico and Canada. Energy imported from Canada, including oil, natural gas and electricity, would be taxed at 10%. The targeted countries are the United States' three largest trading partners.
Underscoring the potential effects, Canada provides more than 4.3 million barrels of oil a day to the United States. The U.S. tends to consume about 20 million barrels a day, according to the U.S. Energy Information Administration. It has been producing domestically about 13.2 million barrels daily.
The levies on Canada and China were still slated to go into effect Tuesday. But on Monday, Trump and Mexican President Claudia Sheinbaum announced that they would forestall a trade war for a month to allow for negotiations. Mexico said it would deploy 10,000 members of its national guard to the U.S.-Mexico border.
Why did Trump issue the tariffs?
Trump has framed his latest actions as leverage on immigration and drugs. He blamed the three U.S. partners for not doing enough to stop the flow of fentanyl into U.S. markets. He also blamed Mexico and, to a lesser extent, Canada for an inflow of migrants across U.S. borders.
“It is my duty as president to ensure the safety of all,” Trump said on social media after his initial weekend announcement.
Still, the president talked often as a candidate — and for decades before he entered politics — about U.S. trade deficits. He blasted international trade deals and bemoaned the steady flow of manufacturing jobs out of the U.S. to other countries.
Despite Trump’s assertions that the U.S. does not need Canada, one-quarter of the oil that America consumes per day is from its ally to the north. He reiterated his false claim that America subsidizes Canada by running a trade imbalance, a reflection in part of Canada exporting energy to the U.S.
Trump contended that without that surplus, “Canada ceases to exist as a viable Country."
"Harsh but true!" he wrote on social media. "Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS!”
What was the response?
Trump’s order included a promise to escalate the tariffs if U.S. trading partners answered with their own. That threat did not prevent a swift response.
Canadian Prime Minister Justin Trudeau said he would put matching 25% tariffs on up to $155 billion in U.S. imports.
Trudeau urged Canadians to “choose Canadian products” when shopping, effectively urging a boycott of U.S. goods. Locally, multiple premiers of Canadian provinces said they would be removing American alcohol brands from government store shelves.
Trump brushed aside the retaliatory measures, saying, “If they want to play the game, I don’t mind. We can play the game all they want.”
As of Monday, China had not imposed new tariffs on U.S. goods. But its Ministry of Foreign Affairs said the Beijing government will take “necessary countermeasures to defend its legitimate rights and interests.” The Ministry of Commerce said it would file a lawsuit with the World Trade Organization for the “wrongful practices of the U.S.”
What could this mean for you?
End-line consumers don’t pay tariffs directly. It’s usually whatever company — a foreign-based exporter or a U.S.-based importer — is transporting goods across the border. But that adds to the overall cost of getting goods to their final retail stop, and each player in the process is certain to increase its prices as it encounters new border duties.
Gregory Daco, chief economist at the tax and consulting firm EY, calculates the tariffs would increase inflation. Daco projects the U.S. economy, which grew 2.8% last year, would fall by 1.5% this year and 2.1% in 2026.
The Budget Lab at Yale University estimates Trump’s tariffs would cost the average American household $1,000 to $1,200 in annual purchasing power.
Those estimates were made presuming the tariffs include Mexico.
The effects reach even to products billed as “Made in the U.S.A.” Sometimes that label means only that a product is assembled or otherwise finished in a U.S. facility but still includes raw materials, parts or packaging from elsewhere.
And as Trump often said during the campaign, energy costs — which become transportation costs in the supply chain — also drive consumer pricing. Given Canada’s share of the U.S. energy supply, gas prices could increase, especially in the Midwest, where so much Canadian crude oil is refined.
“We may have in the short term, a little pain, and people understand that," Trump said Sunday. "But long term, the United States has been ripped off by virtually every country in the world.”
In Illinois, Gov. J.B. Pritzker said "no other state in the nation imports more good to Canada than the Land of Lincoln." He also said Illinois is one of the top give states in exports to both Canada and Mexico.
"All together, Illinois exports support 800,000 jobs," Pritzker wrote on social media, adding those jobs are "now at risk."
"The people of Illinois, the people of the United States, are going to pay the price for what Donald Trump is doing," Pritzker said in an interview on MSNBC's "The Weekend." "Let me tell you, Canada and Mexico are our two largest trading partners here in Illinois. We get most of our natural gas and also gasoline from north, right from Canada. So, when you impose a 25% tariff, you're imposing that tariff on working families in Illinois."
What's next?
Uncertainty remained about the durability of any deals and whether the tariffs were a harbinger of a broader trade war, as Trump has promised more import taxes to come.
But Trump is also declaring an initial victory as Mexico's president agreed to devote national guard forces to address drug trafficking and border control.