Trump vows day-one tariffs on Mexico, Canada and China
Donald Trump has stated that, on the first day of his presidency, he will impose new tariffs on China, Mexico, and Canada in a bid to pressure them into addressing illegal immigration and drug trafficking into the U.S.
The president-elect announced that, immediately following his inauguration on January 20, he will sign an executive order placing a 25% tariff on all goods imported from Mexico and Canada. He also plans to impose a 10% tariff on China until the Chinese government takes action to prevent the smuggling of the synthetic opioid fentanyl into the U.S.
Should Trump follow through on these plans, it would represent a significant escalation in tensions with America’s three largest trading partners.
Trump stated that the tariffs on Mexico and Canada will remain in effect until both countries take action to combat drug trafficking, especially fentanyl, and illegal immigration. He made this announcement in a post on his Truth Social platform, asserting that both Mexico and Canada have the “absolute right and power” to solve the issue. “It is time for them to pay a very big price!” he wrote.
In a separate post, Trump criticized Beijing for not honoring its commitments to execute individuals involved in fentanyl trafficking, a pledge he claims Chinese officials made.
A Chinese embassy spokesperson responded, telling the BBC that the notion of China knowingly allowing fentanyl precursors to enter the U.S. is “completely counter to facts and reality.” He emphasized that China views economic and trade cooperation with the U.S. as mutually beneficial and warned that no one would win a trade or tariff war.
Meanwhile, the Biden administration has urged Beijing to take more stringent measures to curb the production of fentanyl ingredients, which are believed to have contributed to nearly 75,000 deaths in the U.S. last year.
During his election campaign, Trump threatened Mexico and China with tariffs of up to 100%, if he deemed them necessary, much higher than those he put in place during his first term in office.
Trump has also said he will end China’s most-favoured-nation trading status with the US – the most advantageous terms Washington offers on tariffs and other restrictions.
Tariffs are a central part of Trump’s economic vision – he sees them as a way of growing the US economy, protecting jobs and raising tax revenue.
He has previously claimed that these taxes are “not going to be a cost to you, it’s a cost to another country”.
This is almost universally regarded by economists as misleading.
“It’s clearly consistent with his promise that he made during the campaign to utilise tariffs as a weapon to accomplish many of his policy initiatives,” Stephen Roach, Senior Fellow at the Paul Tsai China Center of Yale Law School told the BBC’s Business Today programme.
Trump’s pick for Treasury Secretary, Scott Bessent, has previously suggested that the president-elect’s threats to impose major tariff hikes were part of his negotiating strategy.
“My general view is that at the end of the day, he’s a free trader,” Bessent said of Trump in an interview with the Financial Times before he was nominated for the role.
“It’s escalate to de-escalate.”
It comes as the Chinese economy is in a significantly more vulnerable position than it was during the previous Trump presidency.
The country has been struggling with a number of serious issues, including an ongoing property market crisis, weak domestic demand and growing local government debt.
The new tariffs appear to break the terms of the US-Mexico-Canada Agreement (USMCA) on trade.
The deal, which Trump signed into law, took effect in 2020. It continued a largely duty-free trading relationship between the three neighbouring countries.
After Trump made his tariff threat, he discussed trade and border security with Canada’s Prime Minister Justin Trudeau, according to the Reuters news agency.
Mexico’s finance ministry said: “Mexico is the United States’ top trade partner, and the USMCA provides a framework of certainty for national and international investors.”
