U.S. Introduces Heavy Tariffs on Its Largest Trading Partners

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Newsbites

Chart of the week (graph by The News Memo): The rate of obesity is correlated with the number of McDonald’s locations.

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Epstein Saga: A “truckload” of additional Epstein files were delivered to the DOJ last Friday after AG Pam Bondi gave the FBI a deadline to turn over all information that was being withheld. Last week, amid the lackluster release of “Phase I” of the Epstein files, Bondi said she was informed by a source that the Southern District of New York FBI office was hiding files. Bondi said personnel are now reviewing the additional thousands of pages of information and said FBI Director Kash Patel will provide a detailed report as to why the files were withheld.

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The U.S. suspended military aid and intelligence sharing with Ukraine this week, following the turbulent meeting (video) at the White House between President Trump and Zelensky. However, the aid and intelligence sharing appears likely to resume if constructive talks with Ukraine resume. After the meeting at the White House on Friday, Zelensky met with European leaders, who reiterated their support of Ukraine, including an additional $2B pledge of support from the UK for air defense systems.

More: After Zelensky said on Monday that a peace deal to end the war was “still very, very far away,” he appeared to quickly retrace his comments. The next day, Zelensky issued a statement in which he apologized for how the meeting at the White House unfolded and said he was ready for peace talks to end the war soon and sign the minerals deal with the U.S.

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U.S. suspends deportation flights citing cost: On March 1, the U.S. stopped the practice of using military aircraft to deport illegal immigrants to Guantanamo Bay and other places around the world. Flight-tracking data shows the administration used about 30 C-17 and a dozen C-130 military aircrafts to deport migrants. But the staggering price tag may have brought it to an end. Some reports say the cost was roughly $20,000 per migrant. For context, standard ICE deportation flights cost $8,500 to $17,000 per hour, while a C-17 military transport aircraft costs $28,500 per hour.

Related: Illegal border crossings in February fell to the lowest level in decades at 8,300 apprehensions. For context, in both February 2023 and 2024 there were more than 130,000 encounters with immigrants crossing the Southern border.

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Moon Landing: New footage captures Firefly Aerospace’s Blue Ghost making history as one of the first commercial spacecraft to land on the Moon. It touched down in the Mare Crisium basin, in the Moon’s northeast quadrant, on March 2. Launched from Earth on January 15, the Blue Ghost is the latest partnership between NASA and private firms. (video)

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Trump Address to Congress: President Trump gave a historically long address (140 min) to a joint session of Congress on Tuesday. Other than touting his administration's accomplishments, he reaffirmed the U.S.’s interest in acquiring Greenland, saying, "We need Greenland for national security and even international security, and we're working with everybody involved to try and get it." The speech was cheered by Republicans and often interrupted and booed by Democrats. Representative Al Green of Texas was removed by security after heckling the President during the speech. (video)

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Quantum Computing Development: Microsoft said it has achieved a major step toward building a quantum computer and the company now thinks a commercially-useful prototype could be developed within years instead of decades. Named Majorama 1 after the Italian physicist Ettore Majorana, Microsoft said it has created a new state of matter by building the world’s first topoconductor, which combines a semiconductor (indium arsenide), a superconductor (aluminum), and near absolute zero temperatures (explainer video).

More: Microsoft is one of two remaining participants in DARPA’s quantum computing program. DARPA is the top-secret government agency that works with institutions to develop new military technologies. Past projects include helping develop the internet, GPS, and drones.

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TRENDS: Pet Insurance Gains Popularity in the U.S.

As the saying goes, as long as there’s a market for it, you can insure it. An insurance market that is growing is the pet insurance market.

As The News Memo has covered previously, dog ownership in the U.S. has soared over the past two decades, with the number of American households with dogs increasing from 31M in 1996 to 60M in 2024. The biggest increase happened during the pandemic. Households spend on average ~$1,800 per year, or $150 per month, on their dog. For perspective, the typical American household spends about $175-200 per month on gasoline.

As pet ownership has grown, the pet insurance market has followed suit.

One of the industry leaders in North America is Trupanion, a $1.5B public company that specializes in insurance for dogs and cats. Started in 2000, today Trupanion has nearly 1.7M pets enrolled in its plans. The company’s revenue growth (chart below) reflects the trend of more people owning pets and spending money on their care.

Insurance policies cover things such as diabetes, heart disease, hospital stays and surgeries, medications, and unexpected injuries and illnesses. They do not cover pre-existing conditions.

What does a typical policy cost?
We submitted a quote on Trupanion for a 3-year-old male labradoodle in St. Paul, MN. With a $250 deductible, the monthly premium was $125, or $1,500 per year. A policy for a 1-year old female Shih Tzu with a $250 deductible, the monthly premium was $82, or about $1,000 annually. Policies range primarily based on the age and breed of the dog. Cat insurance on average is less expensive.

How does the U.S. compare with other countries?
In the U.S., about ⅔ of households have at least one pet, but only 2-3% are insured. Meanwhile, some European countries have much higher rates of pet insurance. Sweden is at the top by a wide margin, with around 80% of pets insured. The UK is second with about 30%.

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U.S. Introduces Heavy Tariffs on Its Largest Trading Partners

"If war is what the US wants, be it a tariff war, a trade war or any other type of war, we're ready to fight till the end." - China’s embassy X post

What happened?
Trump issued a series of heavy tariffs on Tuesday against the U.S.’s three largest trading partners: Canada, Mexico and China.

Mexico:

• 25% tariff on all imports: Took effect at 12:01 a.m. on Tuesday with no exceptions for energy products (unlike Canada).

• Adjustment: On Thursday, Trump adjusted the tariffs, exempting goods compliant with the U.S.-Mexico-Canada Agreement (USMCA) from the 25% rate for one month (until April 2, 2025). The most important product exempted from the tariffs are automobiles. Approximately 50% of Mexican imports are non-USMCA-compliant and remain subject to the 25% tariff.

Canada:

• 25% tariff on most imports: Took effect at 12:01 a.m. on Tuesday covering all goods except specific energy products.

• 10% tariff on energy products: Applied to Canadian oil, electricity, and other energy resources.

• Adjustment Announced Today: On Thursday, Trump exempted USMCA-compliant goods from the 25% tariff for one month (until April 2, 2025). About 38% of Canadian imports are USMCA-compliant and thus exempt; 62% remain subject to the 25% tariff.

China:

• 20% tariff on all imports: Increased from an initial 10% tariff (imposed in February 2025) to 20%, effective Tuesday.

Retaliatory tariffs on the U.S.

• Canada Implemented a 25% tariff on U.S. goods immediately after Trump put the tariffs into place. They have also threatened to cut energy supply, which would have a big effect on Midwest states.

• Mexico: The president of Mexico said, "It's inconceivable that they don't think about the damage this is going to cause to United States citizens and businesses with the increase in prices for things produced in our country.” She said retaliatory tariffs will be coming shortly.

• China responded by adding a 15% on a large sum of U.S. farm exports. It also increased how many U.S. companies are subject to export controls and other restrictions.

While these are the initial counter-tariffs, the trade situation with each country remains in flux as negotiations are ongoing.

What are Trump’s motivations?
While it’s not clear what Trump’s ultimate goals may be, he has emphasized two things: stopping the flow of fentanyl into the U.S. and instituting “reciprocal” tariffs to make trade agreements fair between the U.S. and other countries.

The issue of fentanyl is primarily related to China (where most of the precursors of the drug originates) and Mexico and Canada, as the drug is trafficked across the southern (primarily) and northern borders.

Regarding tariffs against all other countries, the Trump administration said it plans to institute “reciprocal” tariffs on April 2. On average, the U.S.’s tariff rate for imports entering the country is around 3%, whereas other countries tariff U.S. goods at around 7%.

The U.S. is a critical market for Canada and Mexico
Canada and Mexico each send roughly 75-80% of their total exports to the United States, making them very dependent on U.S. markets. Meanwhile, China has less dependence on the U.S., with about 15% of their exports going to the United States.

The U.S. receives about 45% of its total imports from Canada, Mexico, and China, split roughly 15% between each country.

The U.S.’s top 5 trading partners are Mexico, Canada, China, Germany, and Japan.