U.S. President Donald Trump signs executive orders in the Oval Office at the White House in Washington, U.S., Jan. 30, 2025.
Elizabeth Frantz | Reuters
In an apparent ending to weeks of intense speculation, the White House confirmed Friday that President Donald Trump will be leveling aggressive tariffs this weekend on major U.S. trading partners.
Karoline Leavitt, the White House press secretary, said Trump will be implementing 25% tariffs on Mexico and Canada as well as a 10% duty on China, in retaliation for “the illegal fentanyl that they have sourced and allowed to distribute into our country.”
The White House provided few details on exactly how the levies will be meted out, saying that they will be available for public inspection at some point Saturday.
The news sent the Dow Jones Industrial Average down more than 300 points, or about 0.7%. The S&P 500 traded slightly lower, and Nasdaq Composite was marginally higher. All three major benchmarks were up solidly earlier in the day.
Dow Industrials slide
“These are promises made and promises kept by the president,” Leavitt said.
There was no word on potential exemptions to the tariffs; the White House denied an earlier Reuters report that there would be at least some exclusions rather than simply blanket measures covering all products, and that the tariffs would be delayed until March 1.
Together, the U.S. does about $1.6 trillion in annual business with the three countries. Trump is seeking to use the tariffs as both bargaining chips and methods to effect foreign policy changes, specifically the immigration and drug trade issues.
“We’ve got the Super Bowl coming up, and eerily, the amount of people that fit in the [New Orleans] Superdome are almost exactly equal to the number of people dying every year here in America from fentanyl, and that comes from China and Mexico,” Trump trade advisor Peter Navarro told CNBC in an interview earlier Friday. “This is why we have these kind of discussions.”
Economists worry that the tariffs could reignite inflation at a time when it appears price pressures are beginning to abate. The Commerce Department reported Friday that an inflation reading closely watched by the Federal Reserve rose to 2.6% in December, but the details in the report appeared more positive.
However, Fed officials have said they are monitoring the impact of fiscal policy.
“It will be very important to have a better sense of the actual policies and how they will be implemented, in addition to greater confidence about how the economy will respond,” Fed Governor Michelle Bowman said.
Speaking to CNBC on Friday morning, Chicago Fed President Austan Goolsbee said the key will be whether the tariffs are one-off events or lead to retaliation.