section_path: Trade conflicts by country/Canada and Mexico
section_name: Canada and Mexico
paragraph_text: Canada and Mexico
  
  Three weeks after Trump won reelection, he announced a 25% tariff on all imports from Canada and Mexico unless they took action against illegal immigration and drug trafficking, particularly fentanyl. Mexican President Claudia Sheinbaum and then-Canadian Prime Minister Justin Trudeau sought to de-escalate tensions. While Trudeau noted that less than 1% of illegal border crossings and less than 1% of fentanyl into the US come from Canada, he unveiled a $1.3 billion security plan for the Canada–US border on December 16, 2024. Despite these efforts, on February 1, Trump ordered the tariffs to begin February 4, with a reduced 10% rate for Canadian energy products. Bloomberg News reported that Trump advisors Peter Navarro and Stephen Miller led the economic discussions on the tariffs.
  
  Trudeau and Sheinbaum condemned Trump's actions and threatened immediate economic retaliation, but on February 3, the three leaders negotiated a one-month delay on the tariffs. As part of the agreement, Mexico committed to deploying 10,000 troops to its border with the United States, while Canada pledged to appoint a "fentanyl czar" and continue implementing the border security plan announced in 2024. In return, Trump pledged to take measures to curb weapons trafficking to Mexico and to collaborate with Canada on a joint anti-crime "strike force".
  
  However, on February 27 Trump claimed that "drugs are still pouring into our Country from Mexico and Canada" and reaffirmed his planned tariffs, leading to their implementation on March 4, 2025. Canada retaliated with 25% tariffs on $20 billion (CA$30 billion) in US goods, with plans to expand to $85 billion (CA$125 billion), while Mexico prepared its response for March 9. The Wall Street Journal warned the tariffs had "the potential to profoundly reshape relations between the US and two of its biggest trading partners, abruptly reversing America's decades-long project of expanding free trade with its allies."
  
  The onset of the trade war triggered stock market declines and economic concerns, particularly for retailers and car manufacturers. Lutnick quickly signaled tariff reductions. "The president is listening to the offers from Mexico and Canada. He's thinking about trying to do something in the middle," he said on March 5. The same day, Trump delayed tariffs on USMCA -compliant automakers. The next day, he extended the delay to all USMCA-compliant goods until April 2. While only 50% of Mexican and 38% of Canadian imports were officially compliant in 2024, many companies skipped the paperwork since their goods already qualified for low tariffs under most favored nation rules. Officials from both countries expected most exports to be compliant within weeks. Canada retained its initial retaliatory tariffs but suspended the planned increase. Tens of thousands of Mexicans celebrated with Sheinbaum in Mexico City's central plaza.
  
  Although the USMCA exemption was expected to expire on April 2, that day the White House announced it would continue indefinitely. USMCA-compliant auto parts were also exempted from a 25% tariff. However, Trump signed orders imposing 25% tariffs on steel, aluminum, and automobile imports from any country, including Canada and Mexico. Canada, the US's largest supplier of steel and aluminum, was significantly impacted by US tariffs on these products, and retaliated on March 13 with 25% tariffs on an additional $20.6 billion (CA$29.8 billion) of US goods. On April 9, Canada implemented a 25% tariff on US-made vehicles that are not compliant with the USMCA.
  
  On April 11, 2025, Trump, threatened Mexico with new tariffs, arguing Mexico had not fulfilled a 1944 agreement to send 1.75 million acre-feet of water from the Rio Grande via numerous dams and reservoirs. Trump said Mexico had only fulfilled 30% of the agreed quota. He added that "Mexico has been stealing the water from Texas Farmers". Sheinbaum said the quota had not been fulfilled due to a "three-year drought" and suggested that an alternative agreement could be reached.
  
  On April 15, Canada announced several measures to provide relief from tariffs, including a 6-month pause on tariffs on US imports critical for manufacturing, food and beverage processing, healthcare and public safety. The country also exempted automakers that continue manufacturing in Canada and introduced a loan program for large Canadian businesses struggling with financing. On April 28, Mark Carney led the Liberal Party to victory in the Canadian federal election, with the party winning enough seats to form a minority government. The Liberal Party's victory was partly attributed to the anti-Trump sentiment that had been rising in the country since Trump's tariff impositions.
  
  On June 4, US steel and aluminum tariffs doubled to 50%. Carney said Canada was in intense negotiations with the US but preparing reprisals if they failed. Canada's aspirations to reach a deal dimmed as it became apparent the US was not in a hurry. However, at the 51st G7 summit the two countries pledged to work on a deal with the next 30 days.