In a report about the economic situation in Mexico and Canada after the implementation of U.S. President Donald Trump's threats to impose tariffs on the two countries, CNN Business stated that Trump pledged to impose tariffs of about 25 percent on imports from Canada and Mexico for their failure to stop fentanyl and migrants from entering the United States. This has led economists to predict an economic recession in the two nations as a result of the tariffs, but the question remains: Will Trump really impose them?

Despite the pessimistic forecasts about the effects of the tariffs, Wall Street investors did not sell their stocks, nor did corporate executives panic, and economists did not lower their growth projections. Investors on Wall Street expect that Trump is bluffing with his threat to impose tariffs.

Goldman Sachs: Tariffs Unlikely

Goldman Sachs sees only a 20 percent chance that the U.S. President will impose tariffs on Canada and Mexico.

The bank's experts noted in a report, "We remember that in 2019 he also stated that he would impose a tariff of up to 25 percent on Mexico within 10 days, but the tariff was never implemented."

Goldman Sachs also points out that Trump did not follow through with his threat to impose tariffs on Canada, Mexico, and China on day one.

It is entirely possible that Trump will choose not to impose tariffs on Canada and Mexico, especially if the two countries agree to open negotiations this year, instead of next year, regarding the renegotiation of the U.S.-Mexico-Canada Agreement.

Heidi Crebo-Rediker, a senior fellow at the Geoeconomic Studies Center at the Council on Foreign Relations, stated, "Trump may hope that the ten-day delay will create a strong incentive for Mexico and Canada to take action."

Tariffs Will Disrupt Trump's Plan to Lower Gas Prices

Another promise from Trump that may be at risk due to the tariffs is his commitment to lower gas prices to below two dollars a gallon. However, imposing tariffs would drive gas prices up.

This is because Canada is the largest foreign oil supplier to the U.S., providing Canada and Mexico with 71 percent of U.S. oil imports in 2023.

After the tariffs are implemented, U.S. consumer prices for gasoline, diesel, and other petroleum products will rise, especially in areas that are more dependent on Canadian crude oil.

Patrick De Haan, head of petroleum analysis at GasBuddy, told CNN, "Unless Canadian oil is exempt from the tariffs, gas prices could rise by 20 to 50 cents a gallon in the Great Lakes region, because refineries there rely more on Canadian oil."

De Haan also expects an impact ranging from 10 to 30 cents a gallon in the Midwest and Rocky Mountains as well as in the Northeast, which imports gasoline, diesel, heating oil, and jet fuel from refineries in New Brunswick and Quebec.

Car Prices to Rise by $3,000

Emmanuel Rosenberg, chief research analyst at Wolfe Research, stated in a report released in November 2025, "The imposition of such tariffs would be devastating to the U.S. auto industry."

Car buyers will be directly affected, as the average cost of a car in America is expected to rise by about $3,000, according to estimates from Wolfe Research.

Tariffs Will Destroy the Economies of Both Countries

Economists expect that implementing the tariffs will quickly push the Canadian and Mexican economies into recession.

According to recent analysis by the Peterson Institute for International Economics, imposing a 25 percent tariff on all goods from Mexico and Canada would wipe out $200 billion from U.S. GDP, $100 billion from the smaller Canadian economy, and reduce Mexico's growth rate by 2 percent.

Mexico is the most vulnerable because its economy heavily relies on exporting goods to the United States, which accounts for more than 25 percent of its GDP.

Tim Hunter, chief economist for Latin America at Oxford Economics, stated that the Mexican economy is significantly exposed to tariffs, which is why Hunter expects that tariffs will push Mexico into recession later this year.

The Peterson Institute's report noted that the economic issues resulting from the tariffs would increase the illegal crossing of Mexican migrants over the border into the United States, which directly contradicts another priority of the Trump administration.

Canada is already preparing to respond with a comprehensive list of tariffs on goods made in the U.S., including everything from steel and orange juice to pet food and alcoholic beverages such as Jack Daniel's whiskey.