Another delay for the implementation of import tariffs on Canada and Mexico may be in the cards.

President Donald Trump said Wednesday, Feb. 26^th that levies of 25% on imported goods from Mexico and Canada, as well as 10% duties on certain Canadian energy products like crude oil, may not go into effect until April 2^nd.

In early February, Trump announced the tariffs on two of America’s largest trading partners, but then quickly suspended them until March 4^th. He’s now indicated another month’s delay is possible.

Still, U.S. Commerce Secretary Howard Lutnick appeared to indicate to reporters that there would be a pause on the tariffs only if Canada and Mexico sufficiently prove to Trump by March 4^th that “they’ve done an excellent job” at taking actions that will prevent the flow of illegal drugs, like fentanyl, and illegal immigrants into the United States from their nations.

“They have to prove to the president that they’ve satisfied him in that regard,” Lutnick said. “If they have,” there could be a pause on the tariffs.  

A White House spokesperson later told Politico that, as of today, tariffs on Mexico and Canada are on track to take effect on Tuesday, March 4^th. “That [timeline] is still intact. He’s still reviewing progress,” made by Canada and Mexico to address Trump’s concerns, said the official.

Trump’s stated reason for wanting to enact the tariffs has been, in part, to compel Canadian and Mexican authorities to intensify efforts to combat illicit drugs and illegal migrants from entering the U.S. Both nations have pledged to take steps to ratchet up border security but whether or not that will be enough to stave off Trump's levies remains to be seen. 

On Monday, Trump said that tariffs would be “moving forward,” prompting media outlets everywhere to report he planned to definitely implement the Canada/Mexico tariffs on March 4^th. The White House on Tuesday backpedaled on those statements, saying Trump was referring to another round of levies – namely, reciprocal tariffs he is considering placing on nations around the globe.

Legal challenges appear likely to follow if Trump moves forward with the Canada/Mexico tariffs. Still, challengers would likely need to get a judge to slap an injunction against enforcing duties until at least when the case is adjudicated to prevent impacts; that’s a big ask, and a court battle against the president’s administration could prove a protracted long shot.

Promo Worries About Lost Business, Higher Prices

An enactment of 25% tariffs on Mexican and Canadian imports would likely impact the promotional products industry, complicating merch commerce between the U.S. and those nations, and almost certainly stoking price increases on products brought stateside from America’s neighbors.

The potential negative impacts to the promo industry in Canada, for instance, could be more severe.

“If the tariffs remain in force for an extended period of time, we will see Canadian companies cut back on discretionary spending, reduce headcount and ultimately many businesses will cease operations,” said Danny Braunstein, the Winnipeg-based director of client success for Counselor Top 40 distributor BAMKO (asi/131431) in Canada. “This will trickle down to all Canadian businesses, including promotional products distributors and suppliers. It is difficult to prepare for this scenario with so many unknowns.”

Complicating matters is that Canada has pledged retaliatory tariffs on U.S. goods and Mexico is vowing countermeasures too if the Trump administration proceeds with its levy plan.

That, combined with the U.S. tariff threat, is already causing problems for some distributors in Canada.

“If the tariffs remain in force for an extended period of time, we will see Canadian companies cut back on discretionary spending, reduce headcount and ultimately many businesses will cease operations.” Danny Braunstein, BAMKO (asi/131431)

“We’ve observed a shift in client behavior: Customers who typically place project-/campaign-based orders in Q1 are delaying decisions until there is more clarity on the tariffs,” shared Sam Singh, president and CEO of Full Line Specialties (asi/199688) in Surrey, BC. “A potential risk of this ‘wait-and-see’ approach is that clients may reconsider their promotional merchandise budgets altogether. If they forgo branded merchandise for a Q1 trade show or new product launch and see no significant impact on booth traffic, they may deprioritize branded merch in the future.”

Singh worries a tariff war among North America’s three countries will lead to increased costs, supply chain disruptions and pricing uncertainties for Canadian promo firms.

Still, there could be repercussions for U.S. promo companies too beyond just higher costs to import products that may originate in Canada or Mexico. Domestic industries, such as automotive, that may be hurt by import tariffs could reduce promo spend, for instance. Also, some Canadian distributors said they will send less business to U.S.-based suppliers, opting for domestic options or China-based providers.

“If U.S. factories increased their prices because they are impacted with additional tariffs, we will buy more from China,” said Christine Courtemanche, vice president of Linéaire Infographie inc. (asi/253727) in Laval, QC.

If Trump were to again suspend the tariff implementation, whether for a month or longer, there are certainly promo pros who would welcome the news.

“My reaction would be joy and relief,” said Rich Patterson, owner of PBJ Merch (asi/291582) in New Westminster BC. “Any basic high school economics class covers how ‘uncertainty’ is troublesome for any economy. What we have right now is uncertainty on steroids.”

Patterson sounded a note of optimism. “I believe cooler heads will prevail,” he said. “I know our leaders will be able to work out a deal and upgrade to the most successful free trading zone in the history of the world.”