Over 30 years ago, the United States entered a free-trade agreement with Canada and Mexico based on the belief that aligning with two strong economies would ultimately serve America’s own interests. However, President Trump announced in early March that a sweeping 25 percent tariff on the approximately $1 trillion in annual imports from Mexico and Canada—only to reverse course shortly after.

With these tariffs in place, these measures undermine the United States-Mexico-Canada Agreement (USMCA), a pact designed to facilitate free trade and strengthen North American economic integration. By imposing tariffs on goods from these partners, the U.S. disrupts integrated supply chains, particularly in the automotive sector, where components often cross borders multiple times during production.

This disruption leads to increased production costs and potential job losses in the U.S. For instance, Stellantis, which is a huge automaker company, announced temporary factory closures in Canada and Mexico and laid off 900 American workers in response to the tariffs. Additionally, the tariffs have sparked retaliatory measures from Canada and Mexico, further escalating trade tensions and harming industries reliant on exports. The Bank of Canada has also warned that prolonged trade conflicts could lead to increased unemployment and a potential recession.

Tony Stillo, the director of Canada economics at Oxford Economics, predicted that the tariffs could drive the Canadian economy into a recession, raise consumer price inflation by nearly 4 percent compared to the previous year, and lead to layoffs that would push the unemployment rate above 8 percent.

Marcus Noland, executive vice president and director of studies at the Peterson Institute for International Economics, projected that a 25 percent tariff could slow Mexico’s economic growth by around 2 percentage points, potentially causing widespread factory closures and significant job losses.

In a speech to Congress in March, Mr. Trump justified his tariffs by stating that they were not only meant to protect American jobs, but also to protect the core values of the nation. He claimed that the tariffs were aimed at making America wealthy and great again, asserting that the country was already seeing positive changes that would occur quickly. He acknowledged that there might be some temporary disruptions, but emphasized that they wouldn’t be significant or long-lasting.

But in reality, the tariffs have led to significant economic disruptions, rather than the swift benefits Mr. Trump predicted. The imposition of tariffs has caused increased costs for consumers, as prices for goods and services have risen. Many businesses have also struggled due to disrupted supply chains, especially those relying on imports from Canada and Mexico. The tariffs have triggered retaliatory measures from other countries, escalating trade tensions and harming U.S. exporters. While some job sectors may have seen temporary boosts, the broader economic impact has been negative, with layoffs and factory closures in industries hit hard by the increased costs and trade disruptions. Instead of quick and widespread prosperity, the effects of the tariffs have been more complex and harmful to the economy overall.

by Caitlyn Pantaleon