President-elect Donald Trump announced Monday that he intends to introduce new tariffs on imported goods from the United States' top three trading partners: China, Mexico, and Canada. This move solidifies a key campaign promise and could significantly impact trade. Trump stated on Truth Social that he plans to impose a 25% tariff on products imported from Mexico and Canada, framing this proposal as a response to the ongoing fentanyl crisis.
"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," Trump wrote. "This Tariff will remain in effect until such time as Drugs, in particular Fentanyl and all Illegal Aliens stop this Invasion of our Country!"
Trump also mentioned plans to impose additional tariffs on China.
"I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States — But to no avail," Trump wrote. "Until 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."
In response to Trump's announcement, Chinese Embassy spokesperson Liu Pengyu stated that China has been in communication with the US about counternarcotics operations, and that “the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”
Regarding US tariffs on China, Liu added, “China believes that China-US economic and trade cooperation is mutually beneficial. No one will win a trade war or a tariff war.”
Canadian officials responded in a statement posted to X on Monday night, emphasizing that their country “places the highest priority on border security and the integrity of our shared border” and is “essential to US domestic energy supply.”
Following the announcement, the Canadian dollar fell 1.2% against the US dollar, and the Mexican peso fell 2% against the dollar. China’s yuan, though controlled by the government, traded higher – above 7.6% – in offshore markets.
The US imports a significant amount of oil, cars, machinery, plastics, and wood from Canada, while Mexico is the top exporter to the US, supplying electronics, machinery, oil, optical apparatus, furniture, and alcohol. The US also imports electronics, machinery, toys, games, sports equipment, furniture, and plastics from China.
If enacted, these tariffs could disrupt America’s supply chains and industries reliant on goods from its closest trading partners.
Many US imports from Canada and Mexico are exempt from tariffs due to the USMCA trade agreement between the three nations, which Trump pushed for during his first administration. It’s unclear how Trump plans to implement the proposed tariffs without violating the USMCA.
Trump has used tariffs as a tool to boost domestic manufacturing and increase tax revenue. Tariffs are a tax on goods imported to the US, paid by companies that purchase the goods, and typically passed onto American consumers. Most economists believe tariffs will be inflationary, with the Peterson Institute for International Economics estimating they would cost the typical US household over $2,600 a year. Trump's pick for Treasury secretary, Scott Bessent, has said that tariffs would not add to inflation if implemented correctly.
The problem with tariffs is that they often result in retaliatory actions by targeted countries, kicking off a trade war – and that’s exactly what happened during Trump’s first term. This blunted the tariffs’ effect on domestic manufacturing, as manufacturers’ goods became less attractive to overseas buyers.
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