On February 1, 2025, US President Donald Trump issued three executive orders imposing tariffs on Canada, Mexico, and China.

A 25 percent tariff on all imports from Mexico and Canada, and a 10 percent tariff on all imports from China.

But before we get carried away, let’s understand tariffs a little better.

Tariffs are taxes imposed on goods imported from other countries. When you impose tariffs on imports, those goods suddenly become more expensive. This hurts the countries that export those goods. So by all accounts, this is a move that is intended to hurt Mexico, Canada, and China.

Starting on February 4, all goods coming from Mexico, Canada, and China were expected to carry this additional tariff.

The only problem was: The reasons for these drastic moves were not entirely clear.

According to information released by the White House, the executive action is based on two simple things.

First, fentanyl.

Fentanyl is a synthetic opioid used to treat pain. When prescribed by doctors in a controlled manner, it can be an effective tool for managing severe pain, especially in patients who have developed a tolerance to other opioids. However, when used without supervision, fentanyl can be an extremely dangerous drug, even in small doses.

In 2023, fentanyl overdoses caused more than 70,000 deaths in the United States. The very next year, authorities seized approximately 21,000lbs (9,525.4kg) of fentanyl at the US-Mexico border. President Trump has argued that the “deadly fentanyl” flowing across the Mexican border constitutes a national emergency.

So even if the Mexican government is not complicit in this action, you can understand why President Trump would think it’s a problem.

However, there really isn’t such a problem at the Canada-US border. Border enforcement only seized 43lbs (19.5kg) of fentanyl in 2024, and that’s insignificant in the big picture.

So why is Canada involved in all this?

Well, it’s not just Fentanyl that Trump is worried about.

There’s also the issue of illegal immigration.

According to an article in Forbes  —  “Border Patrol catches 23,721 people illegally crossing the US-Canada border.”

That’s a lot of illegal immigrants, and you can see why it should be a concern for both Trump and the American people. However, headlines can be misleading. The 23,000 figure represents only 1.5% of all apprehensions in the US. In fact, on the US-Mexico border, law enforcement arrested more than 1.5 million people that same year.

So in reality, while there is a legitimate problem at the US-Mexico border, it doesn’t appear to be as serious a threat as Canada’s information outlining its tariff policy makes it out to be.

Which brings us back to the more fundamental question  —  “Why is Canada getting dragged into this mess?”

Well, maybe President Trump is trying to please his base. He was elected on these promises and has only followed suit. As a bonus, maybe Trump thinks this move could be a way to gain some much-needed respect.

The only problem is — if the White House were to use this as the official reason, it would cause a whole bunch of problems. It would mean that America is turning its back on free trade. Or maybe it would be seen as a violation of its own trade agreements and possibly even the rules of the World Trade Organization (WTO).

What about Fentanyl and illegal immigrants?

This is a “National Security” issue. So you can see why the official reason might not make much sense until you dig a little deeper.

There’s a third party in this equation — China. Trump has imposed a 10% tariff on the red dragon, putting them in the same category as America’s neighbors. But you might ask, “China doesn’t share a border with the United States. So why are they involved in all this?”

China may not be directly facilitating the flow of Fentanyl. But they do have a role to play in it.

Fentanyl can be made in a number of ways. But no matter which method you choose, you start with something called a precursor. It’s like the main ingredient in a recipe. You take the precursor and chemically modify it one step at a time until you have the final product. In this case — Fentanyl. Chinese pharmaceutical companies are low-cost producers of precursors. In fact, there is a huge connection between Mexican cartels and Chinese pharmaceutical companies, and while the Chinese government is trying to control the supply of precursors, that trade is thriving. So yes, China is in the crossfire.

Now that we’ve listed all the reasons for the tariffs, let’s talk about the impact of such a drastic step.

In fact, I don’t need to talk about the impact. Because right after he imposed the tariffs, both Mexico and Canada imposed retaliatory tariffs on the United States. And just one day later, President Trump negotiated a “deal” that ostensibly resolved the crisis. Both the Canadian Prime Minister and the Mexican President vowed to deploy additional security forces to control the flow of drugs and illegal immigrants. And any additional tariffs imposed for the next 30 days will be temporarily frozen while stakeholders continue to work out a more permanent solution.

However… As of this writing, the tariffs on China are still in effect, and China has responded with its own tariffs on some American imports, including crude oil, farm machinery, and liquefied natural gas.

And that makes me think…

Trump imposed tariffs on Canada and Mexico, citing national security concerns. But just a few days later, he struck deals with both countries, got them to increase border security, and appropriately halted the additional tariffs. Meanwhile, China’s tariffs remain intact.

It feels like Canada and Mexico are part of a larger game — a way for Trump to legitimize the trade war he’s always wanted with China. He’s had quick victories with his neighbors, but the real target is always China.

A classic Trump masterstroke or just a well-timed coincidence? I’ll leave you with that thought. Either way, the tariff game is far from over. It’s going to disrupt a lot of supply chains in the process.