Bank of America analysts described the current tariff situation in the United States as “life and death” at the same time, stressing that tariff uncertainty is expected to continue until the USMCA renegotiation takes place.
The United States has imposed 25% tariffs on imports from Canada and Mexico (10% on Canadian energy) effective March 4.
Canada and Mexico have responded with different approaches. “Prime Minister Trudeau stated in his press conference that the US has launched a trade war against Canada, saying that there is ‘no justification or direct need for these tariffs,’” according to a BofA report.
In response, Canada imposed “25% tariffs on CA$30 billion (US$21 billion) worth of American goods immediately and will impose additional tariffs on CA$125 billion (US$87 billion) worth of goods within 21 days.”
Canada also announced additional measures, including a “25% tariff on energy exports from Ontario to the U.S.”
Mexico took a more cautious approach. “President Claudia Sheinbaum stated that there is ‘no justification’ for these tariffs, given Mexico’s demonstrated track record in addressing fentanyl and security issues,” the bank reported.
Meanwhile, U.S. Commerce Secretary Howard Lutnick hinted that some relief may be in the offing. BofA wrote: “He dismissed the idea of temporarily halting the tariffs but said that if Canada and Mexico do more (to address fentanyl), President Trump is open to compromise.”
BofA concluded, “We believe these developments are consistent with our view that these tariffs are temporary, and that the threat of tariffs on Canada and Mexico will continue until the renegotiation of USMCA 2.0 is finalized.”
