Exclusive: According to insiders, Trump is scheduled to impose tariffs on Canada and Mexico with exceptions on March 1

Three sources familiar with the planning told Reuters that U.S. President Donald Trump is anticipated to announce higher tariffs on imports from Canada and Mexico that would go into effect on March 1 but contain a procedure for the nations to request specific exclusions for certain products.

Prior to Trump’s self-imposed deadline of February 1 for a formal announcement, the tariff discussions were still subject to change.

Although they did not have information on a final tariff number, the sources, who wished to remain anonymous due to their lack of authority to discuss the issue publicly, pointed out that Trump has repeatedly stated that he intends to put a 25% duty on imports from the two nations on Saturday.

According to a separate administration official, Trump was examining tariff proposals on Friday, which would provide certain exclusions. Exemptions will be “few and far between,” the person added.

The Trump administration’s decision to give a 28-day buffer before implementation and potential exclusions would indicate a more cautious approach, even if the news of tariffs may shake financial markets and damage ties between the United States and its top two trading partners.

Additionally, it would buy time for talks on what Canada and Mexico should do to fulfill Trump’s declared objectives for the duties, which include applying pressure on the two U.S. neighbors to stop the flow of border-crossing illegal immigrants and lethal fentanyl narcotics.

A 30-year free trade system that has profoundly unified the three economies is in danger of being disrupted by Trump’s punitive charges and retaliatory tariffs from Canada and Mexico, which may affect almost $1.6 trillion in North American commerce.

The president of the United States stated on Thursday that he is still thinking about imposing an extra 10% tax on Chinese goods as retaliation against Beijing for its suspected involvement in the fentanyl trade. It’s unclear what his plans are for fresh taxes on China, though, since the sources stated that the March 1 tariffs would only apply to Canada and Mexico.

A person familiar with the situation stated that a core White House staff, rather than the incoming trade team headed by U.S. Trade Representative candidate Jamieson Greer and Commerce Department nominee Howard Lutnick, is making decisions about the tariffs.

The U.S. Senate has yet to confirm either, although Greer is set to be confirmed on February 6 by the Senate Finance Committee.

Trump may be worried about how the tariffs would affect gas prices, as seen by his Thursday statement that he will soon determine whether to apply them to imports of Canadian and Mexican oil, which suggested potential exemptions. Based on data from the U.S. Census Bureau, crude oil is the largest import from Canada and one of the top five from Mexico.

There would be no tariff announcements on Friday, according to a White House official.

Tariff money will help fund the continuation of Trump’s 2017 tax cuts, which total around $4 trillion and expire this year, Trump trade advisor Peter Navarro told CNBC on Friday.

Trump was anticipated to declare a national emergency over illegal immigration and fentanyl overdoses, which killed around 75,000 Americans in 2023, in order to use the International Emergency Economic Powers Act (IEEPA) as the legal foundation for the tariffs, according to two people familiar with the situation.

The president has extensive authority to apply economic sanctions in times of crisis under the IEEPA, which was passed in 1977 and amended following the September 11, 2001 attacks on the United States.

Of the trade law options available to Trump, it would provide him with the quickest route to enacting large duties, as other tools need protracted investigations by the USTR or the Commerce Department.

SLIGHT DISRUPTION

Business leaders and economists have cautioned that the tariffs would lead to significant price hikes for electronics, alcohol, fruits, vegetables, aluminum, and timber from Canada, as well as motor cars from both Mexico and the United States.

Businesses that import goods pay tariffs and either accept reduced earnings or pass the costs on to customers, according to experts.

“America will be the first to pay the price of President Trump’s tariffs,” stated Matthew Holmes, head of public policy 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.”

“It’s not what we want, but if he moves forward, we will also act,” stated Canadian Prime Minister Justin Trudeau on Friday, announcing that Canada will swiftly reply with strong countermeasures.

According to a person with knowledge of the strategy, Canada has outlined specific targets for rapid tariff retaliation, including tariffs on orange juice from Florida, Trump’s adopted State. Canada would consult the public before taking action, according to the source, but it has a longer list of targets that may approach C$150 billion in U.S. imports.

The European Union targeted famous American exports like bourbon whiskey and Harley-Davidson (HOG.N), opened new tab motorbikes, and China targeted U.S. soybeans and other agriculture products during Trump’s first term.

Mexico’s president, Claudia Sheinbaum, stated that she was ready to resume border talks and would “wait with a cool head” for Trump’s tariff decision.

“We will always defend the dignity of our people, respect for our sovereignty and a dialogue as equals without subordination,” she declared.

Previously, Sheinbaum claimed that Trump’s tariffs would increase costs for American consumers and lose 400,000 American jobs, and that Mexico would also react.

Last Sunday, Trump and Colombian President Gustavo Petro engaged in a 10-hour verbal sparring match during which Trump threatened to impose 25% tariffs on the South American nation for refusing to let U.S. military planes carrying Colombian deportees. Petro’s acceptance of the flights put an end to the situation.

Regarding its plans for reprisal, China has been more cautious. China is working with the United States to stop the trafficking of fentanyl, and Liu Pengyu, a spokesman for China’s embassy in Washington, said he hopes the United States “will not take China’s goodwill for granted.”

According to a U.S. trade organization executive who spoke on condition of anonymity, Trump’s recent remarks suggesting some progress on immigration and fentanyl issues suggested that tariffs would likely be imposed but deferred. The CEO also mentioned that Trump could have to take concrete steps to support his threats.

“If they keep threatening and then don’t put them in place, they’re going to lose credibility,” the boss stated.