“I’m not stopping the tariffs,” he said during his first Cabinet meeting Wednesday when asked about the timeline. “Millions of people have died because of the fentanyl that comes over the border.”

The impact of those tariffs could severely damage the spirit of the U.S.-Mexico-Canada agreement Trump negotiated during his first term and dissuade other nations from reaching new trade deals if allies believe Trump will later ignore them.

Paul Sracic, an Ohio-based adjunct fellow at the Hudson Institute, said Trump’s tough talk may come back to haunt him.

“I think it’s a problem,” he said. “When you have a deal, and then you sort of go around the deal, it could cause other countries to say, ‘Why should we bother with these negotiations?’”

Trump’s China tariffs made the biggest headlines during his first term, but he negotiated multiple trade deals in office, including the Phase One agreement with China in 2020 and a reworked KORUS pact with South Korea in 2019.

But the crown jewel during Trump 1.0 was USMCA.

Trump campaigned heavily against its predecessor, the North American Free Trade Agreement, during his 2016 presidential campaign, lambasting it as the “worst” trade deal ever. He ushered the replacement, USMCA, through Congress in early 2020, just in time for his reelection bid.

“The USMCA is the fairest, most balanced, and beneficial trade agreement we have ever signed into law,” he said during a speech in Michigan that January. “It’s the best agreement we’ve ever made.”

Now, Trump is singing a different tune. The trade deficit with Canada and Mexico has surged since the deal was reached, with Canada’s ballooning from $26 billion to $63 billion since 2019 and Mexico’s growing from $99 billion to $172 billion over the same time frame.

Because the presidential Trade Promotion Authority expired during the Biden administration, Trump will need to ask Congress for permission to rework any trade deals this time around, something he has yet to do.

Most mainstream economists have said trade deficits are not something to worry about, though Trump and his acolytes have disagreed.

“The U.S. has trade deficits because the rest of the world wants to give us stuff in exchange for dollars in the central bank,” said Gerald Friedman, an economics professor at the University of Massachusetts Amherst. “The world loves getting dollars. It needs more and more dollars to finance international trade because the dollar is still the currency of choice.”

Losing that status would be much more damaging than any gains made from lower trade deficits, he argued.

Still, Trump has held for decades that deficits mean the United States is getting a raw deal from its trading partners, and a rising movement on the political right shares that view.

“What a trade deficit indicates is that a country is consuming, in our case, a trillion dollars more than it produces every year,” said Mark DiPlacido, who worked under U.S. Trade Rep. Robert Lighthizer during Trump’s first term. “It’s common sense that if you do that year after year and decade after decade, something is fundamentally wrong with our economy.”

Deadlines loom for Canada and Mexico

Trump has already pushed back the implementation of his Canada-Mexico tariffs twice, with the current deadline set for March 4, less than a week from now.

There is widespread expectation that the date could be pushed back again if Trump is satisfied with Mexico and Canada’s progress on border security, but the looming deadline still has business and government leaders on edge.

Presidents enjoy wide leeway to implement tariffs on national security grounds, which may partly explain why Trump has talked about them in that context. On Tuesday, Trump raised the scepter of new tariffs on copper, again in the context of national security.

While Trump has said “tariff” is his favorite word in the dictionary and that tariffs can restore American manufacturing and bring in new tax revenue, the Canada and Mexico duties have also been touted as a way to stop illegal immigration and fentanyl trafficking across the lengthy borders the U.S. shares with them.

Some critics alleged that Trump is simply using his national security powers as a loophole to get out of his own trade agreement, an argument DiPlacio rejected.

“In every trade agreement that the U.S. has engaged in, national security considerations have always been a provision,” said DiPlacido, now a policy adviser at American Compass. “The U.S believes that any country should decide what’s in its own national security interests and what’s not.” 

That theory is likely to be challenged in court if Trump follows through.

‘It would be so disruptive.’

Trump first proposed new tariffs ahead of his inauguration, saying they would be implemented on his first day in office. The White House then announced an implementation on Jan. 31 after Trump met with the leaders of Mexico and Canada, which was delayed again to March 4, the current deadline.

Many observers don’t expect the Canada and Mexico import duties to materialize, at least not at the 25% rate Trump targets.

“I can’t believe that they’ll go through with it,” said Friedman. “It would be so disruptive. You’re talking about two of our largest trading partners.”

But the fact that it would be so disruptive is part of the reason that Trump and like-minded thinkers are interested in pursuing tariffs in the first place, as high tariffs could halt the massive rise in trade imbalances.

The flip side is that tariffs can lead to price hikes, with even Trump acknowledging there could be “some pain” in the short term.

Regarding the proposed Canada and Mexico tariffs, Walmart CFO John David Rainey said the retail giant would not be “completely immune” from rising import costs if they go through.

Canada’s largest import into the U.S. is crude oil, meaning that gas prices could be affected as well. The American Petroleum Institute released a cautious statement earlier this month, saying U.S. refineries rely on Canadian crude to produce fuel, especially in the Midwest.

“Energy markets are highly integrated, and free and fair trade across our borders is critical for delivering affordable, reliable energy to U.S. consumers,” said API President and CEO Mike Sommers. “We will continue to work with the Trump administration on full exclusions that protect energy affordability for consumers, expand the nation’s energy advantage, and support American jobs.”

The governments of Mexico and Canada have offered concessions to Trump in an effort to ward off the tariffs, yet they are not assured of what may happen next Tuesday.

“We would need to be reaching important agreements this Friday,” Mexican President Claudia Sheinbaum told reporters earlier this week, according to the Associated Press. “On all of the issues, there is communication, and what we need is to complete this agreement. I believe we’re in a place to do it.”

A Canadian government official told the Washington Examiner that Prime Minister Justin Trudeau is ready for any scenario and that everything is on the table at this point.

Trump administration announces takeover of press rotation for White House events

Even while warning that Trump’s aggressive tactics could endanger future trade deals, Sracic also acknowledged that the sheer size of the U.S. economy means Trump will always have the leverage to use in such scenarios, something that the president has utilized heavily throughout his business and political career.

“We’re witnessing a real-world test of economic theory,” he said. “Every economist is saying that tariffs will cause inflation, that this will raise costs on consumer goods. Maybe we will find out whether that’s right or wrong.”