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Trump is eyeing a big exception to his new tariffs on Canada and Mexico The U.S. gets more than half of all petroleum imports from the two counties

   


U.S. President Donald Trump said on Friday he would impose hefty new tariffs of 25% on goods from Mexico and Canada and 10% on imports from China, and nothing could be done by the three countries to forestall them.

Trump did, however, reference a potential carve out for oil from Canada, saying that rate would be 10% versus the 25% planned for other goods from the United States' northern neighbor. But he indicated wider tariffs on oil and natural gas would be coming in mid-February, remarks that sent oil prices higher.
Trump has been threatening the tariffs for weeks, saying they would be imposed on Feb. 1 and remain in place until the countries did more to stem the flow of both migrants and fentanyl over the U.S. border.
Speaking to reporters in the Oval Office as he was signing executive orders, Trump said he understood the duties could result in higher costs being passed on to consumers and acknowledged his actions may cause disruptions in the short term. Most economists estimate such sweeping import taxes, and the likely retaliation would disrupt economic activity around the globe.
Asked if there was any opportunity at this stage for the three top U.S. trading partners to win a delay, Trump said: "No, no. Not right now, no."
He brushed away the notion his threats for levies have been a bargaining tool. "No, it's not ... we have big (trade) deficits with, as you know, with all three of them."
"It's something we're doing, and we'll possibly very substantially increase it, or not, we'll see how it is," Trump said. "But it's a lot of money coming to the United States."
And more tariffs are on the way, the Republican president said, saying import taxes were being considered on European goods, steel, aluminum, copper, and drugs and semiconductors.
"We're going to be putting tariffs on steel and aluminum, and ultimately copper. Copper will take a little longer," he said.
Financial markets have been whipsawed by the rapid-fire but still not fully clear developments on Trump's tariff plans, with currency trading showing particular volatility. The Canadian dollar and Mexican peso both weakened while Treasury bond yields rose, and stocks ended the day lower.
Still, he said he was not concerned about the reaction of financial markets to his plans to impose tariffs.
"The President will be implementing tomorrow 25% tariffs on Mexico, 25% tariffs on Canada, and a 10% tariff on China for the illegal fentanyl that they have sourced and allowed to distribute into our country, which has killed tens of millions of Americans," White House spokesperson Karoline Leavitt told a press briefing.
Leavitt said details of the tariffs will be released sometime on Saturday.
Item 1 of 3 A drone view shows trucks waiting in line at the Zaragoza-Ysleta border crossing bridge to cross into the U.S., as new tariffs are expected soon from U.S. President Donald Trump, in Ciudad Juarez, Mexico January 31, 2025. REUTERS/Jose Luis Gonzalez
When Trump imposed punitive duties on Chinese goods in 2018 and 2019, there was typically a lag of two to three weeks for Customs and Border Protection to begin collecting tariffs, due to computer system updates and notices required for importers.
Trump traveled late on Friday to his Mar-a-Lago estate in Florida, saying he would work all weekend there. He was joined on the flight by his commerce secretary nominee Howard Lutnick, who Trump has designated as his trade policy chief.

MAJOR DISRUPTION

Economists and business executives have warned the tariffs would spark increases in the prices of imports such as aluminum and lumber from Canada, as well as fruits, vegetables, beer and electronics from Mexico and motor vehicles from both countries.
Trump again spoke of collecting hundreds of billions of dollars in revenues from other countries, but economists generally say tariffs are paid by firms that import goods and pass the costs on to consumers or accept lower profits.
"President Trump's tariffs will tax America first," said Matthew Holmes, public policy chief 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."
Trump's move is expected to draw retaliatory tariffs, potentially disrupting more than $2.1 trillion in annual two-way U.S. trade with the three trading partners.
Canadian Prime Minister Justin Trudeau on Friday said Canada would immediately respond with forceful countermeasures, adding Canadians could be "facing difficult times in the coming days and weeks."
Canada has drawn up detailed targets for immediate tariff retaliation, including duties on Florida orange juice, a source familiar with the plan said. Canada has a broader list of targets that could reach C$150 billion ($105 billion) worth of U.S. imports, but would hold public consultations before acting, the source said.
Mexican President Claudia Sheinbaum said she would "wait with a cool head" for Trump's tariff decision and was prepared to continue a border dialogue.
Sheinbaum previously said Mexico also would retaliate, arguing Trump's tariffs would cost 400,000 U.S. jobs and drive up prices for U.S. consumers.
China has been more circumspect about its retaliation plans but has vowed to respond.
China "firmly opposes" Trump's new duties, a spokesperson for Beijing's embassy in Washington said, adding: "There is no winner in a trade war or tariff war, which serves the interests of neither side nor the world."
Tariffs have been top-of-mind for corporate executives in the early days of this quarter's earnings season as U.S. President Donald Trump threatens to hit allies Mexico and Canada with levies on imported goods.
Those tariffs are expected to now begin on March 1, with an announcement on Saturday, but it is possible Trump will back off those threats or target only specific industries.
How companies navigate the issue is a key topic on conference calls and at investor events this quarter. Nearly 200 companies that are part of the S&P 1500 - large, mid-and small-cap stocks - have mentioned either "nearshoring," "tariffs," or "supply chain" through January.
So far, many CEOs' remarks are similar to those of Textron (TXT.N), opens new tab CEO Scott Donnelly, who said on Jan. 22 that "we're just going to kind of hang in there and see how it plays out."
Here are some of the aspects trade executives are discussing:

PRODUCTION LOGISTICS

Several companies over recent weeks have discussed the challenges of moving production around. Some companies manufacture in the United States as well as Mexico or Canada, and may be hit by tariffs if they import components that cannot be relocated to the U.S.
"We have available capacity in our domestic operations to shift production as needed to minimize those tariff impacts if they were to occur," said Brent Yeagy, CEO of transportation logistics company Wabash National (WNC.N), opens new tab.
Power sports vehicle manufacturer Polaris (PII.N), opens new tab spoke about this on its earnings call, noting how in 2017 it moved swiftly to get out of China, and now faces potential tariffs due to production facilities in Mexico. In addition, it is also dealing with higher labor costs for its U.S. operations.
"Relative to the rest of the power sports industry up and to this point, we have been incredibly disadvantaged," Michael Speetzen, CEO of Polaris, said on a conference call to discuss earnings on Jan. 28. "We're the only U.S. manufacturer yet we're the only ones paying tariffs."

MOVING SHIPMENTS AROUND

Some companies have suggested they will consider shifting around where they send their shipments. Large global firms with operations in numerous companies may be able to adjust shipments from one spot to another.
For instance, Alcoa (AA.N), opens new tab CEO William Oplinger said on Jan. 22 that imports would probably increase from countries with lower duties in the Middle East and India, while Canadian aluminum could be rerouted to Europe and other countries. That is because a 25% tariff on Canadian aluminum exports to the United States could "represent $1.5 billion to $2 billion of additional annual cost for U.S. customers," he said.

ACCELERATED SALES

Numerous companies already said they were seeing customers boost orders ahead of tariffs, both in the last quarter and the current quarter. Automakers like General Motors (GM.N), open new tab accelerated deliveries to get ahead of tariffs.
Some companies are anticipating Trump may announce a gradual acceleration of tariffs - which could then spur pre-emptive purchases. "I do not see heightened pre-buy activity on products. I think most are taking the stance that if or when they occur, there'll be some notice period to do that," said Neil Schrimsher, CEO of Applied Industrial Technologies (AIT.N), opens new tab.

INFLATION AND PRICING

Numerous executives have said that tariffs would inevitably be passed on to consumers. Eric Cremers, CEO of forest products company PotlatchDeltic (PCH.O), opens new tab, and commented on the company's earnings call that he was aware of a Canadian lumber producer that would try to pass along 100% of tariff costs to its customers. "Now will they be able to get all that 100% of whatever the duty is or not? Who knows what will ultimately wind up happening, but their plan is to pass that along to consumers."
U.S. consumers grappling with soaring prices for beef and eggs will face even higher costs for meat, vegetables and fruit if President Donald Trump imposes tariffs on Canadian and Mexican imports, economists and food industry executives said.
Consumers have struggled with high inflation since the COVID-19 pandemic and voted for Trump in part due to discontent with higher prices. Trump pledged to bring down costs for ordinary Americans.
The White House said on Friday that the new tariffs on Canada and Mexico will take effect on Feb. 1, denying a Reuters report that they would be delayed until March 1.
Tariff-related price increases would hit consumers' wallets at a time when beef prices are near record highs and costs for eggs have climbed after bird flu eliminated millions of egg-laying hens. Bird flu cases in dairy cows have also reduced milk output in top-producer California.
Shortly after taking office last week, Trump set the Feb. 1 deadline for imposing 25% tariffs on imports from Mexico and Canada unless the countries move to halt flows of illegal immigrants and the deadly opioid fentanyl into the U.S. He also said he would impose a 10% tariff on Chinese goods over that country's role in the fentanyl trade.
"Any increase in expenses in the form of a tariff subsequently serves as a 'food tax' on consumers for imported products and is not a workable solution," National Grocers Association spokesman David Cutler said.
Tariffs are paid by importers, not exporters, who either pass on the costs to consumers or face lower profits.
The Trump administration says its planned tariffs will not cause higher prices in the U.S. Vice President JD Vance said on Sunday that consumer prices will start coming down, but it might not happen immediately.
Supply disruptions due to tariffs would highlight how reliant the nation has become on its neighbors to feed its population.
The United States imported $195.9 billion of agricultural goods from suppliers around the world in 2023, according to U.S. Department of Agriculture and U.S. Customs data. That included nearly $86 billion from Mexico and Canada, the top two suppliers representing 44% of the total.
Up to 40% of fresh produce sold in U.S. food stores is imported, according to the National Grocers Association
"We import most of our fresh fruit and vegetables from Mexico and Canada so you will definitely see inflation on those products," said Rob Fox, an economist and director of CoBank's Knowledge Exchange.
"These are products that are not easily replaced," he said. "I can't go out and plant tomatoes in Illinois in January and hope to replace them."
About two-thirds of U.S. vegetable imports and half of its fruit and nut imports come from Mexico, according to the USDA. That includes nearly 90% of its avocados, as much as 35% of its orange juice, and 20% of its strawberries.
Avocados from Mexico, a marketing arm of Mexico's avocado industry, was shipping 52 to 53 million pounds of avocados each week to the U.S. in December, CEO Alvaro Luque said. That climbs to more than 70 million pounds ahead of the U.S. Super Bowl football game which this year is on Feb. 9, he said, highlighting America's demand.
The threat of tariffs alone can be inflationary, said David Ortega, an economist at Michigan State University.
"Food companies are scrambling to come up with contingency plans in terms of where they might source these products should these tariffs come into place, and that adds cost to their operations," he said.

HIGHER BEEF PRICES

The U.S. normally imports more than 1 million cattle from Mexico annually, though Washington has blocked shipments since late November due to the discovery of a pest in Mexico.
Canadian cattle also are shipped into the U.S. to be fattened and slaughtered. Analysts said tariffs or trade disruptions could affect products ranging from ground beef to steaks.
Uncertainty over tariffs has encouraged U.S. meat buyers to lock in purchases of domestic supplies or imports before Feb. 1, said Bob Chudy, a consultant for beef importers.
"If it goes through anything like threatened, it will definitely push U.S. beef prices up significantly higher," he said of tariffs.
U.S. retail prices for ground beef hit a record high of $5.67 per pound in September and were a little below that last month, according to the Bureau of Labor Statistics. Prices for the hamburger meat are up 42% from four years ago.
U.S. beef demand hit a 38-year high in 2024 despite record prices, said Lance Zimmerman, senior animal protein analyst for RaboResearch Food & Agribusiness.
An increase in imports and heavier cattle weights have compensated for smaller domestic herds.
U.S. cattle inventories dropped to their lowest in decades after drought reduced grazing lands. It takes roughly two years to raise a new cow to be ready for slaughter.
"Beef prices are high right now and trade disruptions can introduce some chaos into the markets," Zimmerman said.

The U.S. Centers for Disease Control and Prevention and other federal health agencies on Friday took down webpages with information on HIV statistics and other data to comply with Trump administration orders on gender identity and diversity, raising concerns among physicians and patient advocates.

CDC webpages that appear to have been removed include statistics on HIV, opens new tab among transgender people and data on health disparities, opens new tab among gay, lesbian, bisexual and transgender youth. A database tracking behavior, opens new tab that increase health risks for youth was offline.
Earlier this month, President Donald Trump ordered the federal government to solely recognize male and female sex and eliminate diversity, equity, and inclusion programs.
The Office of Personnel Management gave agencies more specific guidance on how to comply with the orders in a Jan. 29 memo, opens new tab, saying they were to be completed by 5 p.m. ET (2200 GMT) on Jan. 31.
It specified that agencies must end all programs that promote or reflect "gender ideology extremism" by recognizing a self-determined gender identity rather than biological sex. The measures include removing references to gender identity online.
A spokesperson for the Health and Human Services Department, which oversees the CDC, said any changes to websites follow this guidance.
"There's a lot of work going on at the agency to comply," said a source who was not authorized to speak publicly, adding that the CDC is "taking down anything on the website that doesn't support this executive order."
Deletions from the CDC's site include pages with data on HIV in the United States in general, as well as pages with statistics on HIV in Hispanic/Latino people, women, by age, and by race and ethnicity.
The elimination of such data "creates a dangerous gap in scientific information and data to monitor and respond to disease outbreaks," the Infectious Diseases Society of America and the HIV Medicine Association said in a joint statement.
For example, a page with information about how people can get HIV tests was offline on Friday, according to the Internet Archive, as was a page for doctors with information about testing for HIV and treating patients.
"This is very alarming," said John Peller, head of the AIDS Foundation Chicago. "In many cases, basic health information is going dark."
Timothy Jackson, senior director of policy and advocacy at the group, said they are going through the CDC website and printing out information used to educate people about HIV that may not be accessible after Friday.
Also missing from the CDC's website was the Youth Risk Behavior Surveillance System, which tracks trends in tobacco use, teen pregnancy, unsafe sexual behavior and other aspects of teen health.
At the National Institutes of Health, a senior employee this week urged agency leaders to refuse to implement the Trump administration's guidance in an email to acting NIH Director Matthew Memoli and other top officials that was seen by Reuters.
The employee, Nate Brought, director of the NIH executive office, said Trump's orders ran contrary to years of NIH research and findings about sexuality and gender.
"By complying with these orders, we will be denigrating the contributions made to the NIH mission by trans and intersex members of our staff, and the contributions of trans and intersex citizens to our society," he wrote.
"These policies will lead to mental health crises or worse for tens of thousands of Americans who contribute productively to our communities."

U.S. government websites were online and accessible on Friday, and the Office of Personnel Management said media reports that the sites would be taken offline were based on misinterpretation of a memo.

The memo dated Wednesday had ordered federal agencies to scrub mentions of "gender ideology" from contracts, job descriptions and social media accounts in line with President Donald Trump's executive order requiring the government to recognize only two sexes.
The memo gave guidance on carrying out the executive order.
A source had previously said most government sites would not be available after 5 p.m. ET on Friday then clarified that the time was a deadline for removal of diversity-related content.
An OPM spokesperson added: The memo "may have been misinterpreted to mean we would shut down government websites who weren't able to comply but that is not the plan for continuing to implement this important effort."
Asked earlier if government websites would be shut down while information on diversity, equity and inclusion was removed, Trump told reporters: "I don't know. It doesn't sound like a bad idea to me."
He added: "I think DEI is dead, so (if) they want to scrub the websites, that's OK with me."
Trump has moved quickly to quash federal diversity initiatives since taking office on Jan. 20. While Trump's orders have been celebrated by some supporters, they drew criticism from rights advocates who fear he is rolling back progress the United States has made to overcome discrimination.

 Aides to Elon Musk charged with running the U.S. government human resources agency have locked career civil servants out of computer systems that contain the personal data of millions of federal employees, according to two agency officials.

Since taking office 11 days ago, President Donald Trump has embarked on a massive government makeover, firing and sidelining hundreds of civil servants in his first steps toward downsizing the bureaucracy and installing more loyalists.
Musk, the billionaire Tesla (TSLA.O), opens new tab CEO and X owner tasked by Trump to slash the size of the 2.2 million-strong civilian government workforce, has moved swiftly to install allies at the agency known as the Office of Personnel Management.
The two officials, who spoke to Reuters on condition of anonymity for fear of retaliation, said some senior career employees at OPM have had their access revoked to some of the department's data systems.
The systems include a vast database called Enterprise Human Resources Integration, which contains dates of birth, Social Security numbers, appraisals, home addresses, pay grades and length of service of government workers, the officials said.
"We have no visibility into what they are doing with the computer and data systems," one of the officials said. "That is creating great concern. There is no oversight. It creates real cybersecurity and hacking implications."
Officials affected by the move can still log on and access functions such as email but can no longer see the massive datasets that cover every facet of the federal workforce.
Musk, OPM, representatives of the new team, and the White House did not immediately respond to requests for comment.
OPM has sent out memos that eschew the normal dry wording of government missives as it encourages civil servants to consider buyout offers to quit and take a vacation to a "dream destination."
Don Moynihan, a professor at the Ford School of Public Policy at the University of Michigan, said the actions inside OPM raised concerns about congressional oversight at the agency and how Trump and Musk view the federal bureaucracy.
"This makes it much harder for anyone outside Musk's inner circle at OPM to know what's going on," Moynihan said.

MUSK INFLUENCE

A team including current and former employees of Musk assumed command of OPM on Jan. 20, the day Trump took office. They have moved sofa beds onto the fifth floor of the agency's headquarters, which contains the director's office and can only be accessed with a security badge or a security escort, one of the OPM employees said.
The sofa beds have been installed so the team can work around the clock, the employee said.
Musk, a major donor to a famously demanding boss, installed beds at X for employees to enable them to work longer when in 2022 he took over the social media platform, formerly known as Twitter.
"It feels like a hostile takeover," the employee said.
The new appointees in charge of OPM have moved the agency's chief management officer, Katie Malague, out of her office and to a new office on a different floor, the officials said.
Malague did not respond to a request for comment.
The moves by Musk's aides at OPM, and upheaval inside the Treasury building caused by other Musk aides that was reported on Friday, underscore the sweeping influence Musk is having across government.
David Lebryk, the top-ranking career U.S. Treasury Department official, is set to leave his post following a clash with allies of Musk after they asked for access to payment systems, the Washington Post reported on Friday.
The new team at OPM includes software engineers and Brian Bjelde, who joined Musk's SpaceX venture in 2003 as an avionics engineer before rising to become the company's vice president of human resources. Bjelde's role at OPM is that of a senior adviser.
The acting head of OPM, Charles Ezell, has been sending memos to the entire government workforce since Trump took office, including Tuesday's offering federal employees the chance to quit with eight months pay.
"No-one here knew that the memos were coming out. We are finding out about these memos the same time as the rest of the world," one of the officials said.
Among the group that now runs OPM is Amanda Scales, a former Musk employee, who is now OPM's chief of staff. In some memos sent out on Jan. 20 and Jan. 21 by Ezell, including one directing agencies to identify federal workers on probationary periods, agency heads were asked to email Scales at her OPM email address.
Another senior adviser is Riccardo Biasini, a former engineer at Tesla and most recently a director at The Boring Company, Musk's tunnel-building operation in Las Vegas.

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