Donald Trump said on Monday he would sign an executive order imposing a 25% tariff on all products coming in to the United States from Mexico and Canada.
“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 said in a post on Truth Social.
Trump said the tariffs would remain in place until the two countries clamp down on drugs, particularly fentanyl, and migrants crossing the border illegally.
In a follow-up post, Trump announced that the US “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”.
He said that the reason for the additional tariff was China’s failure to curb the number of drugs entering the US.
“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 … Until such time as 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.”
Trump has previously pledged to end China’s most-favored-nation trading status and slap tariffs on Chinese imports in excess of 60% – much higher than those imposed during his first term.
The announcement sparked a dollar rally. It rose 1% against the Canadian dollar and 2% against the Mexican peso, while US stock futures and share markets in Asia fell.
The Chinese economy is in a much more vulnerable position given the country’s prolonged property downturn, debt risks and weak domestic demand.
Tahra Jirari, the director of economic analysis at an organization called the Chamber of Progress, which describes itself as “a new tech industry coalition devoted to a progressive society, economy, workforce, and consumer climate”, has reacted to Trump’s tariffs, pointing out that they will lead to higher prices for consumers.
“Trump vows 25% tariff on ALL Mexico/Canada imports if elected. This means higher prices for Americans. Tariffs = taxes that YOU pay at the store. Cars, food, electronics – all cost more. Even your grocery bill would jump. Companies can’t absorb 25% – it hits your wallet,” she wrote in a social media post.
While on the campaign trail in October, Trump described “tariff” as “the most beautiful word in the dictionary”, and made clear his intentions to reduce US companies’ use of foreign goods and parts by raising their cost. The policy, he said, would strengthen the US’s international trade position and boost US job growth.
Robert Reich, former US secretary of labor, warned that the tariff doesn’t work that way. “A tariff is basically a sales tax, raising the price of almost everything you buy. It’s also regressive – taking a higher percentage out of the paychecks of working people than out of the wealthy,” he posted on social media.
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