President Donald Trump's threats to impose punishing tariffs on Canada and Mexico may be part of a strategy to gain leverage ahead of new negotiations on a regional trade agreement, experts said.

Canada is a main source of crude oil imports and industrial supplies like steel for the United States. More than 71% of U.S. crude oil imports were supplied by Canada and Mexico in 2023, according to a new report from the Congressional Budget Office (CBO). Of that share, 60% of oil came from Canada.

President Donald Trump said in an Oval Office signing ceremony Monday evening that his administration will impose 25% tariffs on Mexico and Canada on February 1, an extraordinary change in North American trade policy that could raise prices for American consumers.

While much about the threatened tariffs is still unclear, experts predict they would be bad news for all three economies, with few winners.

Donald Trump is “very serious” about unleashing unilateral tariffs on neighbors Mexico and Canada without even giving them a chance to negotiate. Some of Trump’s closest advisors said the dramatic action could take place within days.