Trump announces plans for immediate tariffs on Mexico, Canada, and China

Donald Trump has stated his intention to impose new tariffs on China, Mexico, and Canada immediately upon assuming the presidency. This measure is aimed at compelling these nations to intensify efforts against illegal immigration and drug trafficking into the United States. The US president-elect announced plans to sign an executive order, effective after his inauguration on 20 January 2025, that would levy a 25% tariff on all imports from Mexico and Canada. He further stated, “we will be charging China an additional 10% tariff, above any additional tariffs” until that country addresses fentanyl smuggling. This proposed action could signify a significant increase in diplomatic and economic strain with the United States’ three primary trading partners. Such tariffs, which function as a tax on imported goods, also have the potential to result in increased costs for American consumers. The United States holds the position of the world’s largest importer. Official data indicates that China, Mexico, and Canada collectively supply approximately 40% of the $3.2tn (£2.6tn) worth of goods the US imports annually. China has asserted its commitment to combating the illicit drug trade and has cautioned that a trade conflict between the two nations would yield no victor. Following Trump’s announcement of potential tariffs, he engaged in a roughly 10-minute conversation with Canada’s Prime Minister Justin Trudeau, addressing topics of trade and border security, as reported by a Canadian government official to the BBC. The source characterized their exchange as a “good discussion”. The official stated that during the discussion, Prime Minister Trudeau highlighted that the volume of migrants crossing the Canadian border is considerably lower than that observed at the US-Mexico border. Mexico’s finance ministry issued a statement, asserting: “Mexico is the United States’ top trade partner, and the USMCA provides a framework of certainty for national and international investors.” These proposed measures could potentially disrupt the global supply chain and severely impact the three nations subject to the tariffs. On his Truth Social platform, Trump stated that the tariffs on Mexico and Canada would persist until both countries intensify their efforts against drugs, specifically fentanyl, and illegal border crossings by migrants. He further wrote: “Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem.” He added, “It is time for them to pay a very big price!” In a subsequent Truth Social post, Trump criticized Beijing, alleging a failure to uphold commitments he claimed Chinese officials made regarding the implementation of the death penalty for individuals apprehended dealing fentanyl, a synthetic opioid. A spokesperson for the Chinese embassy in Washington informed the BBC that “the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.” The spokesperson also stated, “China believes that China-US economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a tariff war.” The current Biden administration has urged Beijing to intensify efforts to halt the manufacture of ingredients utilized in fentanyl, a substance Washington estimates was responsible for the deaths of nearly 75,000 Americans last year. Throughout his election campaign, Trump had previously warned Mexico and China of potential tariffs reaching up to 100%, if he considered them essential, a rate significantly exceeding those he implemented during his initial presidential term. Trump has additionally indicated his intention to revoke China’s most-favoured-nation trading status with the US, which represents the most preferential terms Washington extends regarding tariffs and other trade limitations. In the previous year, over 80% of Mexico’s exports were directed to the US, while approximately 75% of Canada’s exports went to its southern neighbor. Despite years of a contentious trade disagreement between the globe’s two largest economies, the US continues to represent roughly 15% of China’s total exports. A tariff is defined as a domestic tax imposed on goods upon their entry into a country, calculated proportionally to the import’s value. For instance, a car imported into the US valued at $50,000, if subject to a 25% tariff, would incur a $12,500 charge. Tariffs constitute a core element of Trump’s economic philosophy, which views them as a mechanism for stimulating the US economy, safeguarding employment, and increasing tax revenue. He has previously asserted that these taxes are “not going to be a cost to you, it’s a cost to another country”. This assertion is widely considered misleading by economists. The financial burden of this charge is borne by the domestic company importing the goods, rather than the foreign entity exporting them. Consequently, from this perspective, it represents a direct tax paid by US domestic firms to the US government. During his initial term in office, Trump implemented several tariffs, many of which have been maintained by his successor, President Joe Biden. Economic analyses indicate that the majority of the financial impact was ultimately absorbed by US consumers. It remained unclear whether Trump’s proposed “additional 10% tariff, above any additional tariffs” for China would be applied in addition to the 25% tariff planned for Canada and Mexico. Stephen Roach, a Senior Fellow at the Paul Tsai China Center of Yale Law School, commented to the BBC’s Business Today programme that the action is “clearly consistent with his promise that he made during the campaign to utilise tariffs as a weapon to accomplish many of his policy initiatives.” Scott Bessent, Trump’s nominee for Treasury Secretary, has previously indicated that the president-elect’s warnings of substantial tariff increases formed part of his negotiation tactics. Prior to his nomination for the position, Bessent remarked in an interview with the Financial Times regarding Trump: “My general view is that at the end of the day, he’s a free trader.” He added, “It’s escalate to de-escalate.” This development occurs at a time when the Chinese economy is considerably more susceptible than it was during Trump’s prior presidency. China has been contending with several significant challenges, such as a persistent property market crisis, subdued domestic demand, and increasing local government debt. The proposed new tariffs seem to contravene the provisions of the US-Mexico-Canada Agreement (USMCA) on trade. This accord, enacted by Trump, became effective in 2020 and maintained a largely duty-free trade relationship among the three adjacent nations. Beyond the official responses from the three nations directly impacted, the broader reaction has been critical. Doug Ford, the premier of the Canadian province of Ontario, stated that Trump’s proposed tariff would be “devastating to workers and jobs in both Canada and the US”. Gerardo Fernández, the leader of the Mexican senate, posed the question: “What tariffs should we impose on their [America’s] goods until they stop consuming drugs and illegally exporting weapons to our homeland?” Anthony Zurcher, North America correspondent, provides analysis of the presidential election in his twice-weekly US Election Unspun newsletter. Readers located in the UK can subscribe here, while those outside the UK can sign up here. Copyright 2024 BBC. All rights reserved. The BBC disclaims responsibility for the content of external websites. Information regarding our external linking policy is available here.