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US President Donald Trump said on March 3rd that 25% tariffs on Canada and Mexico would go into effect at midnight, diminishing hopes another last-minute deal could be reached to tamp down trade tensions and escalating inflation, as per Chemweek.
When asked during a press conference if there was any room left for Canada or Mexico to make a deal before midnight, Trump replied, “There’s no room left. They’re all set. They go into effect tomorrow.” The comments sent the S&P 500 down 1.7%. Trump also indicated the previously announced additional 10% tariff on goods from China would also go in effect at midnight.
Trump has repeatedly threatened sweeping tariffs on Canada, China, and Mexico to correct trade imbalances and as retaliation for alleged fentanyl trafficking. “Vast amounts of fentanyl have poured into our country from Mexico and also from China into Mexico and goes to Canada,” he said during the press conference, held to announce a new, $100-billion investment by Taiwan Semiconductor Manufacturing Company in US production capacity.
Trump first announced 25% tariffs on imports from Mexico and Canada, with a lower 10% rate on energy imports from Canada, along with a 10% tariff on Chinese goods, on Feb. 1. The first 10% tariff on China went into effect on Feb. 4, as planned — with Beijing retaliating shortly after with tariffs on US crude oil, coal and LNG — but the tariffs on Canada and Mexico were delayed for 30 days after the countries promised resources to shore up their respective borders.
“I would just say this to people in Canada or Mexico if they’re going to build car plants the people that are doing them are much better off building here because we have the market,” Trump added. “We’re the market where they sell the most and I think it’s going to be very exciting for the automobile companies.”
Last week, Trump also said he would be announcing 25% tariffs on the EU “very soon,” covering “cars and all the things.” He also claimed the member state union was formed in order to “screw the United States,” which received strong rebukes and promises of retaliation from several European leaders.
The US chemical industry had a strong trade surplus of USD30 billion in 2023, bolstered by a low-cost global supply advantage, according to the American Chemistry Council (ACC), which supports the USMCA Agreement among the United States, Canada and Mexico and has consistently advocated for the repeal of tariffs and a de-escalation of trade tensions. US-imposed tariffs hinder the domestic chemicals industry by limiting access to critical materials and manufacturing inputs that may be unavailable or prohibitively expensive to produce in the US, according to ACC.
The Chemistry Industry Association of Canada (CIAC) has expressed similar concerns, emphasizing that both Canadian and US economies have long benefited from seamless trade relations. “Tariffs are taxes,” said CIAC President and CEO Greg Moffat. “They burden industries and consumers purchasing business inputs and consumer goods. Retaliatory tariffs will exacerbate these costs, impacting both consumers and businesses at a time when cost-of-living is already high.”
Companies have also been closely monitoring the impact of these tariffs on demand, supply chains and costs. Axalta CFO Carl Anderson, during the company’s Feb. 4 earnings call, forecast an adjusted EBITDA impact of $10 million for the year due to tariffs. Air Products CFO Melissa Schaeffer, during the company’s Feb. 6 earnings call, acknowledged impact “from a customer perspective… Obviously, the dollar is strengthening.”
mrchub.com