Today’s Finshot explains the real reason that Trump sent Canada and Mexico to customs duties frenzy.
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On February 1, 2025, the US President Donald Trump issued three administrative orders to impose tariffs on Canada, Mexico and China.
25 % tariffs of all products imported from Mexico and Canada, and 10 % of all imports from China.
But before we go ahead of ourselves, let’s understand the customs duties a little better.
Customs duties are taxes imposed on products imported from other countries. When imported to imports, those products suddenly become expensive. This damages the countries that export the product. Therefore, in all accounts, this is the purpose of damage to Mexico, Canada and China.
These tariffs are also called “AD Valorem Tariffs”, a Latin term, meaning “according to value.” This means that tax is calculated as the percentage of product value.
And from February 4, it was expected that all products from Mexico, Canada and China would carry this additional tariff.
The only problem was that the reason for these dramatic movements was not clear.
According to this fact sheet released by the White House, the executive action is summarized in two simple ones.
First, Fentanyl.
Fentanyl is a synthetic opioid used to treat pain. Prescribed by a doctor in a way that is controlled by a doctor, especially in patients who have developed resistance to other opioids are effective tools for managing intense pain. However, if you use it without a director, Fentanyl can be a very dangerous drug even in a small amount.
In 2023, Fentanyl overdose was in charge of more than 70,000 deaths in the United States. The following year’s authorities seized nearly 21,000 pounds Fentanyl at the US border. And President Trump argues that “fatal Fentanyl,” which flows along the Mexico borders, constitutes an emergency of the nation.
Therefore, the Mexican government may not have been collusion of this action, but you can see why President Trump should consider this is a problem.
However, the US border in Canada does not actually have this problem. The border security forces were seized only by 40 pounds in Fentanyl in 2024, which is not important in the magnificent plan of things.
So why is Canada involved in all of this?
Well, that’s not just for fentanol lamps.
There is also an illegal alien problem.
According to Forbes’s article, “Border Security Corps arrested 23,721 people who illegally crossed the United States -Canada border.”
It is a lot of illegal immigrants, and you can see why this is a concern for both Trump and the American people. However, headlines can be misleading. The 23,000 numbers account for only 1.5 % of all US concerns. In fact, the security forces arrested more than 1.5 million in the same year along the border between the United States and Mexico.
Therefore, in reality, there may be a legitimate problem along the border between the United States and Mexico, but it does not seem like Canada has actually brought its serious threat.
This brings us again to more basic questions. “Why is Canada drawn to this confusion?”
Perhaps because President Trump is heading for his voter. He was selected behind these very promises, and he is just following it. As a bonus, Trump may also feel that this movement is a way to attract respect for it.
The only problem is to open the worm can if the White House lists it as an official reason. It is the public declaration that the United States is back on free trade. Alternatively, it may be considered a violation of his own trade agreement or perhaps a violation of the World Trade Organization (WTO). Specifically, XXVIII is stated that customs duties are imposed only for specific purposes, such as protecting national security.
And an illegal alien with Fentanyl?
It is a matter of “national security”. Therefore, you can see if the official reason doesn’t make much sense until you dig deeper.
This equation has a third party in China. Trump imposed a 10 % tariff on the Red Dragon and summarized them with American neighbors. But you may ask -“China does not share the border with the United States, so why are they involved in this?”
Well, China may not directly promote the Fentanyl flow. But they have the role of playing this.
Fentanyl can be prepared in many ways. However, regardless of the selected method, you must start with a precursor. It’s like a major ingredient in recipes. Take the precursor and change the chemicals one step at a time until you get the final product. In this case -Fentanyl. Chinese pharmaceutical companies are low -cost producers of precursor. In fact, there is a large connection between the Mexico cartel and the Chinese pharmaceutical company, and the trade has prospered, even if the Chinese government tries to manage the supply of the precursor. Yes, China is also in cross -fire.
List all reasons for duties, so let’s talk about the meaning of such a dramatic step.
Well, in fact, we don’t have to talk about the meaning. Immediately after he imposed tariffs, both Mexico and Canada imposed retaliation tariffs on the United States. Just one day later, President Trump seemed to have negotiated “trading” to solve the crisis. Both Prime Minister Canadian and President Mexico have pledged to deploy additional security forces to control the flow of drugs and illegal foreigners. And in order for stakeholders to find more permanent solutions, there is a temporary frozen for all additional fees imposed on the next 30 days.
However, at the time of writing this story, China’s tariffs are still in place, and China has been round and return with a unique tariff set on imports of the United States, such as crude oil, agricultural machinery, and liquefied natural gas.
And that kind of thing makes us think …
Trump hits tariffs in Canada and Mexico in quoting national security concerns. But a few days later, he reduced transactions with the two countries, strengthened border security, and paused with additional tariffs. On the other hand, Chinese tariffs remain untouched.
Canada and Mexico feel like a bigger game. This is a way to justify the trade war that Trump has always wanted China. He recorded a quick victory with his neighbor, but the real target may have been China all the time.
Is it a classic Trump master stroke or just a coincidence at the timing? Leave that idea to you. In any case, the tariff game seems to be over. And it will confuse many supply chains in the process.
Until then …
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