United States President-elect Donald Trump has pledged big tariffs on the U.S. three largest trading partners – Canada, Mexico, and China – saying he will implement campaign promises that could trigger trade wars.
Trump, who takes office on January 20, 2025, made the vow in a post on Truth Social on Monday, November 25, 2024.
Trump 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.
Trump also outlined “an additional 10% tariff, above any additional tariffs” on imports from China, in some of his most specific comments on how he will implement his economic agenda since winning the November 5 election on promises to “put America first”.
“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 said.
While migrant arrests reached a record during President Joe Biden’s presidency, straining U.S. border enforcement, illegal crossings fell dramatically this year as Biden instituted new border restrictions and Mexico stepped up enforcement.
More than 83% of exports from Mexico went to the U.S. in 2023 and 75% of Canadian exports go to the country.
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The tariffs also potentially 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 tariff would appear to violate the terms of the U.S.-Mexico-Canada Agreement on trade. The deal which Trump signed into law took effect in 2020 and continued the largely duty-free trade between the three countries.
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 in which 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 told Reuters.
Trump’s announcement sparked a dollar rally. It rose 1% against the Canadian dollar and 2% against the Mexican peso, while share markets in Asia fell, as did European equity futures. S&P 500 futures fell 0.3%.
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