As the March 4 deadline looms, financial markets and manufacturing sectors across North America brace for potentially massive economic disruption from US President Donald Trump's threatened tariff regime. The comprehensive plan would impose substantial import taxes on goods from Canada, Mexico and China, collectively affecting approximately $1.5 trillion in annual imports to the United States.

According to multiple reports, Trump's proposed levies include a 25% levy on all Mexican and Canadian imports, with a reduced 10% rate for Canadian energy products. Simultaneously, existing 10% universal tariffs on Chinese imports would double to 20%. Commerce Secretary Howard Lutnick described the situation as "fluid", suggesting the final tariff levels remain under active discussion within the administration.

The tariffs, ostensibly aimed at compelling these nations to address fentanyl trafficking and border security concerns, represent one of Trump's most sweeping trade actions to date. Yet economic analysts note the potential consequences extend far beyond these stated objectives.

The US economy is already displaying signs of vulnerability to this looming trade confrontation. A private survey released on March 3 cited by Bloomberg revealed US factory activity approaching stagnation—combining slowing growth with accelerating inflation—as new orders and employment contracted. Material costs jumped to their highest level since June 2022.

Jacob Jensen, an analyst at the American Action Forum, estimates the combined tariffs could impose costs between $120-225bn annually on American consumers and businesses, as reported by AP. This economic burden arrives at a particularly sensitive moment, as consumer confidence recorded its steepest monthly decline since August 2021, dropping 7 points to 98.3 on the Conference Board's index.

Both Mexico and Canada have signalled clear intentions to implement retaliatory measures if Trump proceeds with his tariff plan.

Mexican President Claudia Sheinbaum maintained a measured tone in her March 3 morning press conference, stating simply: "We have a plan B, C, D," without elaborating on specific countermeasures. Mexican officials describe recent diplomatic meetings with US counterparts as "cordial" and point to ongoing security cooperation, including the recent handover of 29 individuals wanted on drug trafficking charges.

Canadian Prime Minister Justin Trudeau has been more explicit, outlining a two-phase retaliatory plan targeting approximately CAD30bn ($20.75bn) in US goods immediately, followed by tariffs on an additional CAD125bn ($86.4bn) three weeks later. Canadian consumers have reportedly begun avoiding American products in anticipation of the trade conflict.

Meanwhile, Beijing has floated potential retaliation against American agricultural and food products, according to state-affiliated Global Times.

Trade experts remain divided on whether these tariff threats represent Trump's definitive policy direction or merely aggressive negotiation tactics. The president previously delayed these same tariffs by 30 days, and both Lutnick and Treasury Secretary Scott Bessent have suggested openness to compromise if sufficient progress is demonstrated on security cooperation.

White House trade adviser Peter Navarro, however, struck a more uncompromising tone on March 3, telling CNBC: "I don't see the president wavering on any of this, because he knows in order to get to a world in which America is strong and prosperous, with real wages going up and [more] factory jobs. This is the path that he's chosen."

Beyond the immediate economic impact, Trump's tariff strategy signals a fundamental realignment of North American trade relations. The threatened measures potentially undermine the United States-Mexico-Canada Agreement (USMCA) that Trump himself renegotiated during his first term and once lauded as "a great deal and a brilliantly drawn-out deal."

More broadly, this approach appears to be merely the opening salvo in a comprehensive protectionist agenda. Trump has already confirmed plans for a sweeping "reciprocal tariff" regime scheduled for April 2, alongside sector-specific tariffs on steel, aluminium, automobiles, semiconductors, and pharmaceutical products.

As Desmond Lachman of the conservative American Enterprise Institute warned, as quoted by AP, Trump's "tariffs on steroids" agenda risks keeping inflation elevated and could potentially tip the global economy into recession.

The next hours will reveal whether Trump opts for full implementation, compromise, or yet another delay—with significant implications for North American trade relations and economic stability.