U.S. President-elect Donald Trump on Monday announced he would impose new big tariffs on Mexico, Canada and China as soon as he takes office, detailing how he will implement campaign promises that could trigger trade wars.
Trump, who takes office on Jan. 20, 2025, said he would impose a 25% tariff on imports from Canada and Mexico until they clamped down on drugs, particularly fentanyl, and migrants crossing the border, in a move that would appear to violate a free-trade deal.
He also separately outlined "an additional 10% tariff, above any additional tariffs" on imports from China. It was not entirely clear what this would mean for China as he has previously pledged to end China's most-favored-nation trading status and slap tariffs on Chinese imports in excess of 60% – much higher than those imposed during his first term.
The tariffs, if implemented, could dramatically raise prices for American consumers on everything from gas to automobiles to agricultural products. The U.S. is the largest importer of goods in the world, with Mexico, China, and Canada as its top three suppliers, according to the most recent U.S. Census data.
The two posts on Truth Social, the social media platform he co-founded, represent some of Trump's most specific comments on how he will implement his economic agenda since winning the Nov. 5 election on promises to "put America first."
Trump railed against an influx of illegal migrants, even though southern border apprehensions have been hovering near four-year lows.
"On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders," he wrote, complaining that "thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before," even though violent crime is down from pandemic highs.
He said the new tariffs would remain in place "until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!"
"Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power," he went on, "and until such time that they do, it is time for them to pay a very big price!"
The tariffs may also spell trouble for overseas companies like the many Asian auto and electronics manufacturers that use Mexico as a low-cost production gateway for the U.S. market.
Trump's threatened new tariffs would appear to violate the terms of the U.S.-Mexico-Canada Agreement (USMCA) on trade. The deal that replaced the North American Free Trade Agreement, or NAFTA, and that Trump signed into law took effect in 2020 and continued the largely duty-free trade between the three countries.
The U.S. accounted for more than 83% of exports from Mexico in 2023 and 75% of Canadian exports.
Canada and the United States, at one point, imposed sanctions on each others' products during the rancorous talks that eventually led to USMCA. Trump will have the opportunity to renegotiate the agreement in 2026 when a "sunset" provision will force either a withdrawal or talks on changes to the pact.
After issuing his tariff threat, Trump held a conversation with Canada's Prime Minister Justin Trudeau, and they discussed trade and border security, a Canadian source familiar with the situation said.
"It was a good discussion and they will stay in touch," the source said.
Trump could be counting on the threat of tariffs to prompt an early renegotiation of USMCA, said William Reinsch, a former president of the National Foreign Trade Council.
"This strikes me more as a threat than anything else," Reinsch said. "I guess the idea is if you keep hitting them in the face, eventually they'll surrender."
Mexico's lower house leader Ricardo Monreal, a member of the ruling Morena party, urged "the use of bilateral, institutional mechanisms to combat human, drug and arms trafficking."
"Escalating trade retaliation would only hurt the people's pocketbooks and is far from solving underlying problems," he said in a post on social media platform X.
Trump's announcement sparked a dollar rally. It rose 1% against the Canadian dollar and 1.6% against the Mexican peso, while share markets in Asia fell, as did European equity futures. S&P 500 futures eased 0.1%.
On China, the president-elect accused Beijing of not taking strong enough action to stop the flow of illicit drugs crossing the border into the U.S. from Mexico.
Trump said he has "had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail."
"Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America," he wrote.
The Chinese Embassy in Washington cautioned on Monday that there will be losers on all sides if there is a trade war.
Beijing believes that China-U.S. economic and trade cooperation is mutually beneficial in nature, embassy spokesperson Liu Pengyu posted on X.
"No one will win a trade war or a #tariff war," he noted.
The embassy also cited steps it said China had taken since a 2023 U.S.-China meeting, after which Beijing agreed it would stem the export of items related to the production of the opioid fentanyl, a leading cause of drug overdoses in the United States.
"All these prove that the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality," the spokesperson said.
Mao Ning, a Chinese foreign ministry spokesperson, told a regular press conference in Beijing on Tuesday that China had noted Trump's comments and would respond in due course.
The Chinese economy is now in a vulnerable position given the country's prolonged property downturn, debt risks and weak domestic demand.
In the run-up to the Nov. 5 election, Trump floated plans for blanket tariffs of 10% to 20% on virtually all imports. He also said he would put tariffs as high as 200% on every car coming across the U.S.-Mexico border.
Mexico's Finance Ministry said of Trump's tariff pledge: "Mexico is the United States' top trade partner, and the USMCA provides a framework of certainty for national and international investors."
Economists say that Trump's overall tariff plans, likely his most consequential economic policy, would push U.S. import duty rates back up to 1930s-era levels, stoke inflation, collapse U.S.-China trade, draw retaliation and drastically reorder supply chains.
They say tariffs are paid by the companies that import the products subject to the duties, and they either pass on the costs to consumers or accept lower profits.
