On February 1, 2025, a trade war started by the United States against Mexico as well as Canada began when the U.S. president Donald Trump signed orders imposing near-universal tariffs on goods from the two countries entering the United States. The order called for 25percent tariffs on all imports from Mexico.
In response, Mexican president Claudia Sheinbaum said Mexico would enact tariffs and non-tariff retaliation against the United States. On February3, one day before they were set to take effect, both leaders negotiated a one-month delay for the tariffs.
The U.S. tariffs took effect on March4; On March6, Trump exempted goods compliant with the United States–Mexico–Canada Agreement (USMCA) from tariffs. Later, the U.S. imposed universal tariffs on steel, aluminum, and automotive imports, including those from Mexico and Canada. Due to the USMCA exemption, as of August 2025, 84% of Mexico-U.S. trade remains tariff-free.
Trump has said the tariffs are intended to reduce the U.S.'s trade deficit with Canada and Mexico, force both countries to secure their borders with the U.S. against illegal immigration and fentanyl smuggling, and promote domestic manufacturing in the United States. Sheinbaum, Trudeau, and Trudeau's successor, Mark Carney, have called the U.S. tariffs unjustified and stated that they violate the USMCA. Economists have said tariffs would likely disrupt trade between the three countries, upending supply chains and increasing consumer prices. In February 2026, the U.S. Supreme Court struck down the tariffs the Trump administration implemented on imports from Canada and Mexico under the International Emergency Economic Powers Act in Learning Resources, Inc. v. Trump.
Economic background
U.S.–Mexico trade
The economies of the United States and Mexico are highly intertwined. In 2024, roughly of goods were transported across the Mexico–U.S. border, and over in commerce between the two countries occurs daily. In 2023, U.S. exports to Mexico totaled , while the U.S. imported over of Mexican products, according to data from the U.S. Census Bureau. More than 75 percent of Mexico's exports go to the United States, and the U.S. is Mexico's primary trading partner. Roughly 70 percent of Mexico's natural gas consumption comes from the U.S., and the U.S. imports about 700,000 barrels of crude oil from Mexico each day. Food production between the two countries is also closely integrated: the U.S. sources roughly half of its fresh fruits and vegetables from Mexico, and Mexico is the top market for U.S. agricultural exports. Mexico is the third-largest exporter of steel to the U.S., behind only Canada and Brazil; both Mexico and the U.S. have been accused of violating an agreement signed alongside the USMCA to limit steel exports between each other. Some Americans, including Trump, have said that Mexico has exceeded the level of exports allowed under the agreement. At the same time, the Mexican steel organization Canacero reported that the level of U.S. steel exports also breached the deal. Mexico is the top source of both automobiles and automobile parts imported to the United States.
Trade agreements In 1994, the United States, Canada, and Mexico signed the North American Free Trade Agreement (NAFTA), a free trade agreement that eliminated almost all tariffs on trade between the three countries. NAFTA has been described as a source of political division. In the U.S., it caused offshoring as U.S. companies relocated their businesses to Mexico for cheaper labor, harming American factory towns and workers. The backlash against free trade allowed candidates like Donald Trump, who supported protectionist policies, to rise to prominence in U.S. politics. However, many parts of the U.S. benefited from NAFTA's increased trade and economic activity. In 2020, during Trump's first term as U.S. president, NAFTA was replaced by the United States–Mexico–Canada Agreement (USMCA), primarily because Trump disagreed with NAFTA. Changes between NAFTA and the USMCA were largely cosmetic; the new agreement maintained zero tariffs on most products traded across the three countries, but allowed some tariffs to be imposed for national security matters. The region covered by USMCA is one of the world's largest free trade zones.
Initial tariff threats
On February 1, 2025, Trump signed three executive orders imposing 25 percent tariffs on all goods from Mexico and Canada except for Canadian oil and energy exports, which received a 10 percent tariff. Mexican energy exports will be subject to the full 25 percent tariff. The orders were issued under the International Emergency Economic Powers Act (IEEPA) and were set to take effect at 12:01 a.m. Eastern Standard Time on February 4. Trump also ordered 10 percent tariffs on China, which would be imposed in addition to the existing tariffs of up to 25 percent on many Chinese goods. The orders included a clause allowing the U.S. to increase its tariffs if the countries respond with their own tariffs or other retaliatory measures.
Trump used the IEEPA—a 1977 U.S. law giving the president broad financial power during declared national emergencies—to circumvent the USMCA's tariff restriction for reasons other than national security, marking the first time the law was used to impose tariffs. Trump cited both the influx of illegal immigrants crossing the United States's borders with both Mexico and Canada, as well as the opioid epidemic in the United States fueled by fentanyl originating in China reaching the U.S. through Mexico and Canada.
According to Bloomberg News, Trump advisors Peter Navarro and Stephen Miller were the leading officials in the economic discussions regarding the imposition of tariffs. At the same time, China was included at the urging of the National Security Council. In a post on Truth Social, Trump said: "We need to protect Americans, and it is my duty as president to ensure the safety of all. I made a promise on my campaign to stop the flood of illegal aliens and drugs from pouring across our borders, and Americans overwhelmingly voted in favor of it." While he acknowledged that the tariffs could cause "temporary short-term disruption," he said that they needed to be imposed. Trump also claimed that "Tariffs don't cause inflation" but rather that "They cause success."
Mexican response
Sheinbaum had spoken to Trump before his inauguration to de-escalate his tariff threats. Trump said that Sheinbaum had agreed to "effectively closing" the Mexico–U.S. border to avoid tariffs; Sheinbaum denied this, but said that "there will not be a potential tariff war". After Trump signed executive orders imposing 25 percent tariffs, Sheinbaum said Mexico would implement tariff and non-tariff retaliatory measures against the United States. She said the retaliation was "in defense of Mexico's interests". Sheinbaum did not specify which U.S. goods Mexico's retaliation would target, though media reports claimed Mexico had been preparing possible retaliatory tariffs ranging from 5 percent to 20 percent on pork, cheese, produce, steel, and aluminum; reports also claimed that Mexico intended to exempt the automotive industry from tariffs.
Marcelo Ebrard, Mexico's secretary of economy, called Trump's tariffs a "flagrant violation" of the USMCA. Sheinbaum also responded to Trump's claim that she has an alliance with the Mexican drug cartels, calling it "slander". At an event on February 1, she said Mexico would keep a "cool head" in proceeding with its retaliations, and she proposed establishing a task force with the U.S. to address Trump's issues with Mexico and said that "problems are not resolved by imposing tariffs".
One-month delay On February 3, 2025, Sheinbaum and Trump mutually agreed to delay the tariffs on Mexico by one month, until March 4. Sheinbaum accepted sending 10,000 troops from the Mexican National Guard to their border to prevent drug trafficking. Trump said the U.S. had pledged to take measures to curb weapons trafficking to Mexico. During their call, Trump complemented Sheinbaum, telling her "You're tough". After their call, Sheinbaum directed Mexican law enforcement agencies to target fentanyl gangs, and Mexican police raided opioid labs and arrested cartel members. On February 27, Mexico transferred 29 cartel operatives, Sinaloa Cartel founding member Rafael Caro Quintero, to the United States to face criminal charges there. Sheinbaum's calm demeanor during calls with Trump and success in mitigating illegal immigration and fentanyl appeared to earn the respect of Trump and impressed members of his administration, including Stephen Miller, who is Trump's deputy chief of staff for policy and the U.S. homeland security advisor. Trump later described Sheinbaum as "a wonderful woman" with whom he has a "very good" relationship.
Subsequent tariff threats On February 10, 2025, Trump imposed 25 percent tariffs on steel and aluminum entering the United States from all countries, including Canada and Mexico, which provide most of the U.S.'s metal imports. The steel and aluminum tariffs are set to enter force on March 12. Trump said those tariffs were "the first of many", and that over the next four weeks, he would discuss tariffs on cars, pharmaceuticals, chips, and other goods with his team. In response, Trudeau called the tariffs "unacceptable" and said he hoped talks with the Trump administration would resolve the issue, but that Canada will have a "firm and clear" response if needed. Shares of U.S. steelmakers rose in response to Trump's order, while prices for steel and aluminum rose.
Imposition of tariffs On March 3, Trump said that the tariffs that were delayed from February would take effect as planned on March 4, and that there was "no room left" for Canada or Mexico to negotiate a last-minute deal with the United States to delay them further. Lutnick said that both Canada and Mexico had made progress on improving border security, but that neither had satisfied the U.S.'s demands to halt the flow of fentanyl into the United States. Sheinbaum reaffirmed that Mexico's prior response plans would take effect when Trump's tariffs were imposed. U.S. tariffs on Canada and Mexico began as scheduled, at 12:01 a.m. Eastern Time on March 4.
The onset of the tariffs led to stock market declines in the U.S., especially for retailers and car manufacturers. On March 5, Lutnick said Trump was "listening to the offers from Mexico and Canada" and "thinking about trying to do something in the middle", suggesting that tariffs could take effect at a less significant scale. Later that day, Trump granted a one-month exception from the tariffs for automakers compliant with USMCA regulations, which represent about 85 percent of passenger vehicles imported to the U.S. from Mexico in 2024. Trump decided after meeting with executives from the three largest U.S. automakers—Ford, General Motors, and Stellantis—who said that the tariffs would harm U.S. companies more than their foreign rivals.
After the U.S. tariffs took effect on March 4, Sheinbaum said she would announce Mexico's countermeasures, including retaliatory tariffs, on March 9. She cited plans to speak with Trump in the intervening days as the reason for her delayed response. Sheinbaum said that if the tariffs persisted, Mexico would "reach out to Canada and other nations" and could look for trading partners other than the U.S. or shift trade alliances "if necessary".