Washington: With less than 24 hours remaining before President Donald Trump's deadline to impose sweeping tariffs on Canada, Mexico, and China, the global economy is on edge.

Shortly after taking office this month, Trump announced a 25% tariff on Canada and Mexico, citing the need for tougher action against illegal migration and fentanyl smuggling. He also warned of an additional 10% duty on Chinese goods, similarly linked to fentanyl concerns. On Thursday, Trump reiterated his commitment to these tariffs and further threatened a 100% levy on BRICS nations if they attempted to create a rival currency to the US dollar.

Potential Economic Impact and Recession Risks
Fentanyl, an opioid many times stronger than heroin, has contributed to tens of thousands of overdose deaths annually. While Beijing has denied responsibility for its spread, Canada has argued that less than 1% of fentanyl and illegal migrants enter the U.S. through its borders.

JPMorgan analysts suggest these tariffs might be a bargaining tactic to push forward a renegotiation of the U.S.-Mexico-Canada trade deal (USMCA). However, dismantling the decades-old free trade framework could be a major economic shock. Analysts caution that Trump's first term showed a pattern of sudden policy changes, making last-minute shifts possible.

Economic experts warn of a looming recession if these tariffs take effect. Wendong Zhang of Cornell University estimates that Canada and Mexico could see GDP losses of 3.6% and 2%, respectively, while the U.S. would face a 0.3% contraction.

According to Oxford Economics, a U.S.-Canada trade war could push Canada into recession, while Mexico might also face an economic downturn. The impact of the tariffs on crude oil imports remains uncertain, with Trump expected to decide Thursday whether to include Canadian and Mexican oil.

Trade and Political Reactions
Both Canada and Mexico supply over 70% of U.S. crude oil imports, with Canada alone contributing nearly 60%, according to a Congressional Research Service report. The potential for tariffs on energy has sparked concerns among industrial buyers and consumers, as highlighted in a Peterson Institute for International Economics (PIIE) report.

In response, Canadian Prime Minister Justin Trudeau has promised pandemic-level financial support for affected businesses and workers if the tariffs are imposed. Mexican President Claudia Sheinbaum remains optimistic that Mexico can avoid the levies. Meanwhile, Trump’s commerce secretary nominee, Howard Lutnick, has suggested that tariffs might not be enforced if Canada and Mexico take action on immigration and fentanyl.

China in the Crosshairs
Trump has not ruled out further tariffs on Chinese goods, with White House spokeswoman Karoline Leavitt confirming that he is still considering the move. In response, Beijing has vowed to defend its national interests, warning that trade wars have no winners.

On the campaign trail, Trump has floated the idea of tariffs of 60% or higher on Chinese imports. BTIG financial analyst Isaac Boltansky predicts a gradual tariff increase, with consumer goods facing lower hikes. He expects Trump to balance negotiations with China between incentives and punishments, aiming for a "grand bargain" before the end of his term.