UPDATED 2/4/2025: President Donald Trump signed executive orders on Saturday enacting a 25% tariff on all imports from Canada and Mexico, except for a 10% tariff on energy resources from Canada. President Trump also signed an additional 10% tariff on China.
On Tuesday, China announced retaliatory efforts on the United States with a 15% tariff on coal and liquefied natural gas products and a 10% tariff on crude oil, agricultural machinery, and large-engine cars imported from the U.S. effective February 10. In addition to the tariffs, China also announced export controls on raw materials used in the production of tech products, including tungsten, tellurium, and more.
President Trump agreed to delay the tariff on Mexico and Canada for 30 days after reaching an agreement on more border security.
Earlier on Monday, Mexico announced it would send 10,000 members of its national guard to the border with the United States to “stop drug trafficking from Mexico to the United States, in particular fentanyl,” Mexican President Claudia Sheinbaum posted on her official X account.
Canadian Prime Minister Justin Trudeau announced that Canada had reached a similar agreement later on Monday. Tariffs are expected to go into effect for China at midnight on February 4.
President Trump used the International Emergency Economic Powers Act (IEEPA) to implement the tariffs, noting in the order that the “sustained influx of illicit opioids and other drugs has profound consequences on our nation, enduring lives and putting a severe strain on our healthcare system, public services, and communities.”
“Kentucky businesses rely on strong trade relationships and these new tariffs will create unnecessary disruptions that hurt our economy. As the state’s largest business association, the Chamber strongly opposes the implementation of tariffs. Tariffs will not solve our border problems and will send prices soaring, costing the average Kentuckian up to $1,200. The bottom line is that tariffs are a tax paid by American families that will stifle growth. As we have seen time and time again, trade works, and tariffs don’t. As a rural, manufacturing state, we have great concern on what these tariffs mean for our auto manufacturers, distillers, and farmers. As this issue progresses, the Chamber will continue to work closely with our members and our Congressional delegation to assess the impact and advocate for policies that protect our economy,” said Kentucky Chamber President and CEO Ashli Watts.
In response to the announcement of the tariffs, Prime Minister Trudeau said Canada would impose a 25% tariff on $155 billion of U.S. goods. President Sheinbaum also shared Mexico would implement tariff and nontariff countermeasures.
China’s Ministry of Commerce said China would challenge the tariff with the World Trade Organization and take countermeasures, which haven’t been outlined specifically.
How Will Tariffs Impact Kentucky?
In 2024, Kentucky imported $7.9 billion in goods from Mexico, 36% of which were motor vehicle parts.
The Commonwealth also imported $6 billion from Canada in 2023, including equipment, machinery, minerals, metals, and more.
The Tax Foundation estimates that the average household will spend an additional $830 in 2025 because of price increases in imported goods.
Stay tuned to The Bottom Line for more updates on federal policies.
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