Tariffs Imposed by Trump on Canada and Mexico Take Effect
On March 4, 2025, President Donald Trump implemented tariffs on imports from Canada and Mexico, initiating a 25% tax on most goods and a 10% duty on Canadian energy products. This decision heightened tensions in global markets and prompted retaliatory actions from the United States’ North American neighbors.
The tariffs against Canada and Mexico come in the wake of Trump doubling the existing 10% tariff on Chinese imports to 20%. In response, China introduced tariffs of up to 15% on various U.S. farm exports and extended the list of U.S. companies facing export controls and restrictions.
In retaliation to the new tariffs, Canadian officials announced plans to impose tariffs on American goods valued at over $100 billion within a period of three weeks. Mexico has not yet detailed its response.
These tariff measures have spurred concerns regarding potential increases in inflation and ignited fears of a trade war, despite Trump’s belief that imposing taxes on imports could drive national prosperity. He has demonstrated a willingness to disregard the warnings of mainstream economists, asserting that tariffs can address economic ailments.
The U.S. stock market experienced a significant decline following Trump’s announcement, with overseas markets also seeing downturns. Originally expected to take effect in February, the tariffs were temporarily postponed for negotiations with Canada and Mexico. Trump justified the tariffs as a means to combat drug trafficking and illegal immigration, claiming that reductions in tariffs would be contingent on resolving the U.S. trade deficit—a goal likely to take considerable time.
Despite the imposition of tariffs, Canadian officials continued to maintain communication with the U.S. government. Canada has declared that its tariffs will remain in effect until the U.S. revokes its measures, indicating readiness to pursue additional non-tariff actions if necessary.
Economists suggest that retaliatory measures from other countries, including Canada and the EU, could exacerbate trade tensions and economic pressures. Canadian leaders are preparing their own set of countermeasures, which may include limiting access to provincial government contracts for American companies.
The Trump administration remains optimistic that the economic impact of tariffs will be manageable, arguing that they may encourage foreign companies to establish factories in the United States. However, analysts note that relocating manufacturing operations is a complex and time-consuming process.
US-Canada Freight Market Sees Surge Ahead of Tariffs
Anticipating the implementation of US tariffs on Canadian goods, cross-border truckload volumes and spot rates have experienced a significant surge. The scheduled tariffs, announced by President Trump to take effect on Tuesday, March 4th, are driving businesses to expedite shipments.
Data from DAT Freight & Analytics reveals a dramatic increase in dry-van spot-market activity. Specifically, volumes from Toronto to Chicago jumped by 57% in the week ending February 28th, accompanied by a 7% rise in rates for that lane.
The looming tariffs, and the potential for retaliatory measures from Canada, are already impacting freight movement and pricing. Since the US election, average spot rates for shipments from the US to Canada have climbed 18%, with a 6% increase in the past two weeks alone, reaching a two-year high. Conversely, Canadian spot rates for US-bound loads have risen by 7% since the election and 5% in the last two weeks, according to DAT.
The heightened cross-border activity is evident in load postings. In January, cross-border freight accounted for an unusually high 72% of posted loads on Canadian load-board operator Loadlink, a DAT sister company. This surge reflects businesses on both sides of the border attempting to secure critical goods before the tariffs take effect, a measure previously delayed until March 4th.
Interestingly, the rate increases observed on the US-Canada border contrast sharply with those on the US-Mexico border. DAT data shows that rate increases from Laredo, Texas, the largest US truck border crossing, to US markets have been relatively muted. For instance, the average rate from Laredo to Detroit increased by only 3 cents per mile in the seven days ending March 3rd. Similarly, Laredo-to-Chicago rates rose by just 2 cents per mile, and Laredo-to-Dallas rates increased by 4 cents per mile.
This disparity underscores the differences in cross-border trucking operations between the US-Mexico and US-Canada borders, with the latter characterized by a more open and streamlined flow of goods.
Navigating Tariffs: The Importance of Supply Chain Mapping
Experts have emphasized that mapping supply chains is crucial for businesses to navigate potential tariff impacts from the Trump administration’s planned tariffs on Canadian and Mexican imports. International trade attorney, Alejandro Gomez-Strozzi, highlighted the need for detailed mapping to understand material origins and supplier dependencies, enabling businesses to adapt to tariff changes. The advice was shared during a webinar focusing on international trade and manufacturing in Mexico, part of a larger supply chain and trade law summit.
Despite initial doubts about the tariffs’ implementation, the White House confirmed its plans. Questions surrounding the legal justification of these tariffs under the USMCA arose, particularly concerning national security exceptions. The Mexican government, through “Plan Mexico,” is actively working to protect its industries and attract foreign investment, aiming to become a top-ten global economy. This plan includes tax incentives to promote nearshoring and increase local content in manufactured goods.
CN Completes Iowa Northern Acquisition
Canadian National Railway (CN) has officially merged with Iowa Northern Railway, following approval from the Surface Transportation Board. This acquisition expands CN’s network, integrating Iowa Northern’s 218 miles of track, primarily located between Cedar Rapids and Manly, Iowa.
CN aims to enhance service for customers by providing single-line access to new markets and promoting economic growth. Safety and reliable transportation were emphasized as key benefits of the merger. The Surface Transportation Board’s approval was granted despite concerns about decreased competition. Iowa Northern, founded in 1984, handles approximately 60,000 cars annually and brings with it a workforce, locomotives, and railcars.
U.S. Ports Surge in Early 2025, Setting New Records
U.S. ports began 2025 with significant year-over-year growth, driven by strong economic activity and strategic importer actions.
The Port of Los Angeles achieved its busiest January ever, handling 924,245 containers, up from 855,652 the previous year. This follows a near-record 2024, where the port processed over 10.3 million units. Port of Los Angeles Executive Director Gene Seroka stated that a strong economy, along with importers hedging against tariffs and anticipating Lunar New Year, fueled this January milestone.
Similarly, the Port of Long Beach reported its strongest January and second-busiest month on record, with a 41.4% increase to 952,733 containers from 674,015. Port officials attributed this surge to retailers accelerating shipments ahead of potential tariffs on goods from China, Mexico, and Canada. Port of Long Beach CEO Mario Cordero indicated they were encouraged by this robust start and remain focused on enhancing competitiveness and sustainability.
The Northwest Seaport Alliance, encompassing Seattle and Tacoma, saw a 25.4% year-over-year increase in January container volumes, reaching 264,869 TEUs. This growth was attributed to improved vessel schedule reliability, consistent rail service, and new customer acquisitions.
Port Houston also experienced a 7% year-over-year increase to 356,407 containers, surpassing the previous month’s volume and building on a record-breaking 2024.
Data from the Port of Oakland, Georgia Ports Authority, South Carolina Ports Authority, and the Port Authority of New York and New Jersey 1 were pending at the time of this report.
