As President Trump’s threats to impose tariffs on goods from Canada and Mexico come closer to reality, various industries and economies are bracing for significant impacts. On February 1, 2025, Trump issued executive orders instituting a 25% tariff on imports from Mexico and Canada, except for Canadian energy, which faces a 10% tariff. Additionally, a 10% tariff on imports from China was announced. In response, Canada announced counter-tariffs on $155 billion worth of US goods, while Mexico is preparing its own tariffs, demonstrating a tit-for-tat approach to trade relations.
Following the tariff announcements, Trump paused implementation for 30 days after discussions with the leaders of Canada and Mexico. This situation indicates that the discussions have far-reaching implications not only for trade but also for global shipping logistics. Despite the heavy reliance on land borders for trade between the US and its neighbors, maritime shipping also plays a vital role, carrying billions of dollars in goods.
Data from the U.S. Bureau of Transportation Statistics (BTS) show a remarkable $760 billion in trade with Canada and $836 billion with Mexico over the 12 months preceding November 2024. Shipping accounted for $121 billion of this value, primarily in mineral fuels and vehicles. While the shipping segment constitutes a smaller portion of trade by value, it ranks second only to pipelines in terms of weight, moving 183 million of the 586 million tonnes recorded. In the US-Canada trade, mineral fuels were the largest cargo type, and for the US-Mexico relationship, trucking dominated, capturing over 72% of trade volume.
By value, $438 billion of the trade with Canada moved by truck, leaving shipping to account for only $38 billion. In contrast, shipping made up a more substantial portion of US-Mexico trade, valued at $83 billion, with mineral fuels reflecting nearly half of goods transported by vessels. Vehicles constituted another top trade category, emphasizing connections beyond mere numbers and highlighting the intricate dependencies within North American trade.
The implications of these tariffs are expected to ripple through supply chains across the continent, affecting everything from agricultural products to automotive industries. With the US being a net importer from both Canada and Mexico, the balance may tip further in favor of tariffs undermining long-established trade relations. The economic repercussions are severe, as consumer goods account for the majority of trade by value, with an intricate fabric of logistics confounding straightforward tariff adjustments.
As analysts assess the developing situation, they remain mindful that these tariff measures could escalate tensions and reshape trade dynamics within North America, making for a period of uncertainty in the global market. Ultimately, the situation underscores the complexities of international trade and the interconnectedness of economies, emphasizing the need for strategic planning amid evolving geopolitical landscapes.
