Trump threatens China, Mexico, Canada with new tariffs over illegal immigration, illicit drugs
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US President-elect Donald Trump said the tariffs would remain in place until the two countries clamped down on drugs.
PHOTO: REUTERS
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WASHINGTON - US President-elect Donald Trump
Trump, who takes office on Jan 20, 2025, said he would impose a 25 per cent 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 per cent 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 Nov 5 election on promises to “put America first”.
It was not entirely clear what this would mean for China, as he has previously pledged to end China’s most-favoured-nation trading status and slap tariffs on Chinese imports in excess of 60 per cent – much higher than those imposed during his first term.
“On Jan 20, as one of my many first executive orders, I will sign all necessary documents to charge Mexico and Canada a 25 per cent tariff on all products coming into the United States, and its ridiculous open borders,” he said in a post on Truth Social.
While migrant arrests reached a record during President Joe Biden’s presidency, straining US border enforcement, illegal crossings fell dramatically in 2024 as Mr Biden instituted new border restrictions and Mexico stepped up enforcement.
More than 83 per cent of exports from Mexico went to the US in 2023 and 75 per cent of Canadian exports go to the country.
The tariffs potentially spell trouble for overseas companies, like the many Asian car and electronics manufacturers that use Mexico as a low-cost production gateway to the US market.
Trump’s threatened new tariffs would appear to violate the terms of the US-Mexico-Canada Agreement (USMCA) 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 US 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 said.
Trump could be counting on the threat of tariffs to prompt an early renegotiation of USMCA, said Mr William Reinsch, a former president of the National Foreign Trade Council.
“This strikes me more as a threat than anything else,” Mr Reinsch said. “I guess the idea is if you keep hitting them in the face, eventually they’ll surrender.”
Mexican President Claudia Sheinbaum said on Nov 26 that she would send a letter to Trump, urging dialogue and cooperation.
“To one tariff will come another and so on, until we put our common businesses at risk,” Ms Sheinbaum said during a regular press conference, warning that tariffs would cause inflation and job losses in both countries.
Trump’s announcement sparked a dollar rally. It rose 1 per cent against the Canadian dollar and 2 per cent against the Mexican peso, while share markets in Asia fell, as did European equity futures. S&P 500 futures fell 0.3 per cent.
China: No one wins trade wars
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 US from Mexico.
“Until such time as they stop, we will be charging China an additional 10 per cent tariff, above any additional tariffs, on all of their many products coming into the United States of America,” Trump said.
A Chinese embassy spokesman in Washington hit back.
“China believes that China-US economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a tariff war,” Mr Liu Pengyu said.
The embassy also cited steps it said China had taken since a 2023 US-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 US.
“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 spokesman said.
The Chinese Foreign Ministry said in a statement that China was willing to continue anti-drug cooperation with the US on the basis of “equality, mutual benefit and mutual respect”.
“The US side should cherish China’s goodwill and safeguard the hard-won sound situation of Sino-US drug control cooperation,” the ministry said.
Chinese Vice-President Han Zheng, speaking at a supply chain expo in Beijing on Nov 26, said China was ready to work with other countries to build an open world economic system and maintain the stability of global industrial and supply chains.
The Chinese economy is now in a much more 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 per cent to 20 per cent on virtually all imports. He also said he would put tariffs as high as 200 per cent on every car coming across the US-Mexico border.
He also voiced his intent to formally invoke the USMCA’s six-year review provision upon taking office. Currently, it is expected in July 2026.
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 US import duty rates back up to 1930s-era levels, stoke inflation, collapse US-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.
Trump frequently refers to countries paying as a consequence of his tariff plan, saying on Nov 25 that Mexico and Canada will “pay a very big price”. REUTERS
