Trump: Oil Will See 10% Not 25% Tariff Feb. 1; Experts Say Collection Can't Begin That Soon

Trump acknowledged that far more fentanyl comes from Mexico than Canada, and that border crossings on the Southern border have fallen sharply, but said, "we've done that ourselves."

Trump said the 25% tariffs he plans will not affect all goods equally -- he said that he thinks he'll impose 10% tariffs on Canadian crude.

The additional 10% tariffs on Chinese goods will be on top of existing tariffs on those imports, he said. Most imports from Canada and Mexico enter duty free, under USMCA, but if they do face tariffs, the 25% also will be added to those duties.

"Possibly we’ll very substantially increase it, we’ll see how it is," he said. "All three haven't treated us very well."

Earlier in the day, White House Press Secretary Karoline Leavitt said the tariffs will be "public" on Feb. 1.

A reporter at her briefing noted that the Canadian prime minister said there would be retaliatory measures.

Prime Minister Justin Trudeau tweeted after Leavitt's remarks: "No one -- on either side of the border -- wants to see American tariffs on Canadian goods. I met with our Canada-U.S. Council today. We’re working hard to prevent these tariffs, but if the United States moves ahead, Canada’s ready with a forceful and immediate response."

The reporter at the White House then asked: "Are we seeing the start of a trade war with Canada?"

"I don't think so," Leavitt replied. She later said, "I think Justin Trudeau would be wise to talk to President Trump directly before pushing outlandish comments like that to the media."

Chrystia Freeland, who is running to be the Liberal Party's prime minister candidate, since Trudeau is resigning, tweeted that Canada's retaliation should match the U.S. levies dollar for dollar, "starting with 100% tariffs on all Tesla vehicles and U.S. wine, beer, and spirits."

When asked what Canada and Mexico need to do to show they are controlling migration and stopping drug trafficking, Leavitt said, "If the president at any time decides to roll back those tariffs, I'll leave it to him to make that decision, but starting tomorrow, those tariffs will be in place."

Mexican President Claudia Sheinbaum, speaking earlier in the day, told reporters that Mexico has an ongoing dialogue on immigration, and makes agreements every day on accepting repatriations, both of Mexican nationals and people of other nationalities.

"Regarding security issues, we communicate within a framework of four principles, which are fundamental to this topic: shared responsibility, mutual trust, collaboration, and respect for Mexico's sovereignty. We always maintain dialogue; it is fundamental to our relationship with the U.S. And we have plan A, plan B, and plan C regarding the U.S. government's decision. It's very important that the people of Mexico know that we will always defend the dignity of our people, that we will always defend respect for our sovereignty, and dialogue as equals."

Since there has been no declaration of emergency under the National Emergencies Act regarding Canada, it's hard to see how tariffs could be collected immediately after an announcement -- unless the scope is more limited, and just involves rolling back Section 232 exemptions for Canada.

However, Council on Foreign Relations Trade Policy Fellow Inu Manak said the president had already declared an emergency for the southern border, and so that might allow tariffs to be collected on Mexican goods a few days earlier.

The process is this: the president has to declare an emergency and notify Congress, and that notification must be published in the Federal Register. That can't be done until Tuesday, because notices must be submitted for public inspection a day before they are published.

"A president can’t just proclaim a tariff, and it goes into effect," Manak said. "There’s some administrative procedures that have to happen."

The proclamation that describes the tariff changes does not have to be published in the FR, but it does have to be released before the International Trade Commission can compile new Chapter 99 numbers to apply to the imports. The ITC issued Chapter 99 numbers for the Section 232 tariffs and quotas, as well as for Section 301 tariffs and Section 201 safeguards.

"I think it’s entirely possible the ITC has already drafted the proclamation," Manak said, so that may not cause any delay. But that proclamation has to be distributed through CBP systems, and Manak estimated that could take three to five days.

"The earliest [tariffs could go into effect], if everything aligned, it would be sometime at the end of next week," she said. "And that would be moving pretty fast."

"It used to take weeks" to make the changes to the computer system, she said.

Some customs professionals also said they thought it would take a few days for the declaration to become reality, though one said it could be within hours.

“It will probably take CBP a couple of days to do the appropriate programming of the new tariffs,” a trade association official told International Trade Today.

Cindy Allen, CEO and founder of Trade Force Multiplier, a consultancy firm, and former head of CBP's since-renamed ACE Business Office, disagreed. "If tariffs are across the board, it will likely be implemented in the form of an additional Chapter 99 tariff number, with one Chapter 99 tariff number for MX and one Chapter 99 tariff number for CA," Allen told ITT. "As CBP has been through this many times, I don't think it will be a challenge for them to implement the tariffs, or that it would take a long time. Basically, they would have to implement the tariffs in the normal downtime on Saturday evening. If the actions are more nuanced or tariffs were assessed on some goods and not others, or there are different tariff rates for different products, that will be a little more complicated. That would take a bit more time, but it would be a period of days not weeks."

Amy Magnus, director of customs affairs for customs broker and freight forwarder A.N. Deringer, said if there are Chapter 99 subheadings, most brokers have software that can program those numbers "fairly quickly, so once CBP announces exactly what data they require for the duties, it should be within a day for most brokers."

Fany Flores-Pastor, senior director of product management at logistics technology provider Descartes, also said CBP could use Chapter 99 for remedial tariffs, and the process to do so could go quickly since CBP has used that process before.

"They could probably simply send an HTS update on the goods that are affected by this regulation," she said.

However, Flores-Pastor said that she is still waiting for directions on how to proceed: "We haven't received anything related to this at all." Because she hasn't received any guidance, that indicates that it might take days for the tariffs to get implemented into ACE.

Despite Leavitt's degree of certainty in describing the coming tariffs, some trade observers still wondered if the threat would not become reality, or at least, not next week.

At the Massachusetts Export Center's Export Expo, after Leavitt's remarks, Ronald Baumgarten, a former deputy assistant U.S. trade representative, said he thinks Trump will act. "I mean, it was Trump himself who said he hasn't seen a tariff he doesn't like," Baumgarten said. “It's being used for a lot of different reasons, and one of them is leverage … it seemed to work relatively successfully with Colombia, actually.”

Clay Lowery, executive vice president of research and policy at the Institute of International Finance, said he thinks Trump “will do something tomorrow," but thinks the tariffs won't be as broad as 25% on everything. "I think he will also build in a few different other leverage steps. Like we're going to put tariffs on this, and maybe we're going to give some exemptions, but you have 60 to 90 days to comply with X, Y and Z. And if you don't, then we're going to slap on more tariffs .... It's kind of a lot of a game here, but this is what Trump likes to do.”

But Lowery also said: "What exactly does he want Canada and Mexico to do? I'm not sure they really know. I'm not sure he really knows. He wants to stop people coming over from the border in Mexico. OK, well, that's been a clear thing since 2015 when he came down the golden escalator. He wants fentanyl to stop coming over, and by the way, the Canadians probably want fentanyl and cocaine and so forth to stop coming from the United States to Canada. So what exactly are they going to negotiate?

"He loves building leverage. He's a leverage aggregator. But then you sometimes have to figure out: What is it you want to achieve?"

Center for Strategic and International Studies Scholl Chair for International Business Bill Reinsch said no one can tell where this roller-coaster ride will stop. Asked what the likelihood is that Trump would impose the tariffs on Feb. 1, he said, "Who knows?"

"We're in the middle of it. Three hours ago, there were published reports that it was going to be delayed to March 1. Two hours ago, there was an announcement that, no, that was wrong, they're going to come tomorrow. That's the latest word, but it's not the last word. We'll see what happens sometime between now and midnight. Trump really is his own U.S. trade representative, and so it's very hard to find anybody who can speak for him authoritatively. He'll make a decision and we'll see.

"I had thought from the beginning that this was a leverage move designed to force negotiations, and that may be it. We'll see. It does appear that he and some of his people who work for him are just itching to impose tariffs on somebody. "

The Congressional Research Service published a report Jan. 31 that noted that if Congress disapproves of the tariffs, it can terminate the national emergency that justifies them through a joint resolution, and that resolution is privileged, with quick deadlines to get votes on the floor.

But Manak said that even if there were a majority to overturn the emergency, it would not be a large enough majority to overcome a veto. She said past presidents vetoed congressional resolutions to end International Emergency Economic Powers Act emergencies. "I don’t think there’s enough Republican votes in Congress to stop him," she said.

Reinsch said that if Trump does use IEEPA -- which he said is a stretch for Canada, a long-time ally -- he'll be sued. "The plaintiffs will have standing. It will be easy, be very easy, to show that somebody's been harmed by this. And then the question will be, can you find a judge who will grant an injunction to stay the tariffs going into effect? And my prediction is that will be hard, because you're asking a federal judge to essentially say, ‘I know more than the president does about what an emergency is.’ And I think judges are going to be reluctant to do that," he said. "Maybe they'll find one. You know, it'll end up in the Supreme Court anyway, after three years, and you know that the outcome of that is unpredictable. The justices do not divide along predictable liberal-conservative lines when it comes to economic issues. So it's hard to say, but in the meantime, you know the tariffs will probably play out and go into effect."