Trump Plans Tariffs on Mexico, Canada and China That Could Cripple Trade
President-elect Donald J. Trump said on Monday that he would impose tariffs on all products coming into the United States from Canada, Mexico and China on his first day in office, a move that would scramble global supply chains and impose heavy costs on companies that rely on doing business with some of the world’s largest economies.
In a post on Truth Social, Mr. Trump mentioned a caravan of migrants making its way to the United States from Mexico, and said he would use an executive order to levy a 25 percent tariff on goods from Canada and Mexico until drugs and migrants stopped coming over the border.
“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” the president-elect wrote.
“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” he added. “We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”
In a separate post, Mr. Trump also threatened an additional 10 percent tariff on all products from China, saying that the country was shipping illegal drugs to the United States.
“Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through,” he said.
Taken together, the tariff threats were a dramatic ultimatum against the three largest trading partners of the United States, and a move that threatens to sow chaos in America’s diplomatic and economic relationships even before Mr. Trump sets foot in the White House.
News of the tariffs immediately set off alarms in the three nations, with the currencies of Canada and Mexico sliding against the dollar and a spokesman for the Chinese Embassy in Washington warning that “no one will win a trade war.”
The tariffs would also have serious implications for American industries, including auto manufacturers, farmers and food packagers, which busily ship parts, materials and finished goods across U.S. borders. Mexico, China and Canada together account for more than a third of the goods and services both imported and exported by the United States, supporting tens of millions of American jobs.
The three countries together purchased more than $1 trillion of U.S. exports and provided nearly $1.5 trillion of goods and services to the United States in 2023.
The costs could be particularly high for the industries that depend on the tightly integrated North American market, which has been knit together by a free-trade agreement for over three decades. Adding 25 percent to the price of imported products could make many too costly, potentially crippling trade around the continent. It could also invite retaliation from other governments, which could put their own levies on American exports.
That, in turn, could cause spiking prices and shortages for consumers in the United States and elsewhere, in addition to bankruptcies and job losses. Mr. Trump has insisted that foreign companies pay the tariffs, but they are actually paid by the company that imports the products, and in many cases passed on to American consumers.
Imposing tariffs on Canada and Mexico would also violate the terms of the North American trade agreement that Mr. Trump himself signed in 2020, called the United States-Mexico-Canada Agreement. That could open the United States to legal challenges, and potentially threaten the pact itself and the terms of trade it sets for North America.
While Mr. Trump did not explicitly invite any negotiations from Canada, Mexico or China, he has a history of using tariffs as leverage in negotiations. That may raise questions about whether his Monday evening announcements were merely an opening offer in what could be an extended negotiation.
He and Prime Minister Justin Trudeau of Canada spoke about two hours after the president-elect’s announcement, at Mr. Trudeau’s initiative, said a Canadian official with knowledge of the call who was not authorized to brief the press and requested anonymity to discuss the exchange. The conversation, the official said, was constructive and focused on trade and security at the border.
Still, if Mr. Trump follows through on his plans to impose tariffs on Day 1, that may leave little time for the negotiations needed to delay or defuse the tariffs.
Flavio Volpe, the president of the Automotive Parts Manufacturers’ Association, a Canadian industry group, said he believed Mr. Trump’s post was just the opening salvo to what would be a negotiation that ultimately was about allies in a fight against China.