New Trump tariffs on Mexico, Canada are now in effect. Here’s what it means for Utah

New 25% trade tariffs on goods from Canada and Mexico went into effect early Tuesday after President Donald Trump declined to extend a 30-day pause in a move the president says aims to quell the flow of illegal drugs like fentanyl into the U.S.

The new assessments also include a 10% tariff on Canadian energy products.

On Monday, Trump also ordered an additional round of 10% tariffs on goods from China, adding to the 10% levy the U.S. imposed last month.

Canadian and Chinese leaders responded swiftly with their own retaliatory trade measures following Trump’s statements Monday. China’s finance ministry announced that beginning next week additional 15% tariffs would be imposed on chicken, wheat, corn and cotton imported from the U.S. as well as new 10% tariffs on sorghum, soy beans, pork, beef, aquatic products, fruits, vegetables and dairy products.

What Justin Trudeau says about tariffs

In a statement released late Monday, Canadian Prime Minister Justin Trudeau said the new tariffs were in violation of the United States-Mexico-Canada Agreement that Trump signed during his first term in office and noted that less than 1% of fentanyl intercepted at the U.S. border comes from Canada.

“Let me be unequivocally clear — there is no justification for these actions,” Trudeau said. “Canada will not let this unjustified decision go unanswered.”

Trudeau said Canada will assess its own 25% tariffs on $155 billion of U.S. goods — starting with tariffs on $30 billion worth of goods on Wednesday and tariffs on the remaining $125 billion on American products in three weeks. The Canadian prime minister said the tariffs will remain in place “until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures.”

Mexico President Claudia Sheinbaum is expected to discuss her country’s response at a press conference later Tuesday.

Last month, Trump also announced that new sector-specific U.S. trade tariffs were in the works, including potential 25% levies on imported vehicles, pharmaceutical products and computer microchips.

When asked if he’d decided on the new tariff rate for imported vehicles, Trump said he would share a final decision on April 2 but that it “will be in the neighborhood of 25%.”

The steep new tariffs could have impacts far beyond the targeted industries, economists and industry experts have warned, and U.S. consumers could see new car prices jump by thousands of dollars, according to a CNN report.

Economic headwinds begins to blow

In an effort to unravel how Trump’s new trade policies would impact Utah businesses, and the state’s roughly $37 billion import/export economy, the Deseret News spoke to international trade group World Trade Center Utah last month.

Utah made plans months ago for trade missions to Mexico in March and Canada in May. Gov. Spencer Cox is scheduled to lead the Canada visit, one that is expected to include talks about critical minerals, energy resources, life sciences industries and other trade-critical topics.

Jonathan Freedman, World Trade Center Utah president and CEO, said the current trade climate is fraught with sensitive issues and his organization is advising members of the Utah business community to not overreact as tensions rise. He noted the upcoming trips will be crucial, now more than ever, to supporting Utah companies and a state economy that’s largely built on a network of vibrant, small business operations.

“Yes, this is an economic headwind,” Freedman told the Deseret News in a February interview. “But Utah shows up. Honestly, I see this as an opportunity for Utah … to lead the way in sub-national diplomacy, international partnerships and economic development.”

Utah’s international trade footprint

According to a report published last year by the University of Utah’s Kem C. Gardner Policy Institute, Utah companies produced $17.4 billion worth of international exports in 2023 that generated over $4 billion in earnings and directly supported nearly 72,000 jobs. That volume contributed over $8 billion to the state’s gross domestic product and $16.7 billion to the state’s gross output. The state exported goods to 200 countries and imported goods from 151 countries.

While the United Kingdom is, by far, Utah’s biggest export partner, the next three biggest are those targeted by the Trump tariffs — Canada, China and Mexico. The U.K. received $7.2 billion worth of Utah goods in 2023 or 41.2% of total exports. Approximately $6.8 billion of the exports to the U.K. stem from unwrought gold, much of it sourced from Rio Tinto Kennecott operations in the state. Canada received $1.7 billion in Utah goods in 2023, Mexico $1.3 billion and China $1.2 billion, according to the Gardner report.

Mexico, Canada and China are also Utah’s biggest import origin countries, sending Utah $4.8 billion, $3.1 billion and $2.7 billion worth of goods, respectively, in 2023.

While Utah’s export value grew by nearly 5% from 2022 to 2023, import volumes have been increasing at a faster pace the last decade and reached $18.6 billion in 2023, resulting in a state-level trade deficit of $1.2 billion.

Freedman noted international trade was a critical component of Utah’s nation-leading economy.

“In Utah, 25% of the jobs rely in some way on international trade,” Freedman said. “That’s over 430,000 jobs, a significant amount that is critical for our economy.”

In addition to offering expertise and resources for Utah businesses to grow their international markets, WTC Utah coordinates various trade missions around the world aimed at building government and business relationships and directly connecting Utah companies with new opportunities.

How to navigate a trade war

Freedman said his group has fielded a flood of communications from Utah companies that are trying to understand the potential impacts of the new tariffs and seeking solutions to staying competitive if trade sanctions go into effect.

For Utah companies that rely on imported goods and components for their products, the Trump tariffs could significantly raise the cost of doing business. For exports, retaliatory tariffs, if implemented, could push the prices of those Utah-sourced goods well above those of their competitors.

Freedman noted most of the Utah businesses engaged in export-dependent operations, some 85%, are small-to-medium size companies that help contribute to the state’s diverse economic portfolio, but lack the scale to make big moves to navigate tariff impacts.

“Small businesses face much bigger challenges and can’t just, for example, relocate their manufacturing sites or deploy a large legal team to identify possible loopholes,” Freedman said. “This could have an inflationary effect on Utah companies that are paying the tariffs as well as the end customer who is buying the products.”

Freedman added that products subject to potential tariffs help “sustain daily life” in Utah and include Canadian lumber, Mexican produce, oil and other commodities.

“We have a housing issue in Utah,” Freedman said. “We’re building houses as fast as we can and we can’t afford to have raw materials jump so much, so quickly.”