President-elect Donald Trump announced plans on Monday to impose significant tariffs on the United States’ leading trading partners—Canada, Mexico, and China—bringing attention to his campaign promises of economic protectionism. His proposals, which could lead to trade wars, aim to address issues such as drug trafficking and border security but may conflict with existing trade agreements.
Trump, set to assume office on January 20, vowed to levy a 25% tariff on all imports from Canada and Mexico. He linked these measures to efforts to curb the flow of drugs, particularly fentanyl, and to address illegal migration across U.S. borders. These tariffs, if implemented, would likely violate the U.S.-Mexico-Canada Agreement (USMCA), a free trade deal in place since 2020.
In a separate statement, Trump targeted China, announcing plans for “an additional 10% tariff, above any additional tariffs” on Chinese imports. This move comes amid his broader intentions to revoke China’s most-favored-nation trade status and impose tariffs exceeding 60%—a figure much higher than those introduced during his first term as president. The exact details of these tariffs remain unclear.
On his social media platform Truth Social, Trump outlined his approach, declaring, “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.” These posts represent some of the most concrete plans he has shared since his November 5 election victory, in which he campaigned on a platform of prioritizing American interests.
Mexico and Canada rely heavily on the U.S. market. In 2023, over 83% of Mexico’s exports and 75% of Canada’s exports went to the United States. Trump’s proposed tariffs could also impact international companies, particularly Asian manufacturers that use Mexico as a cost-effective production hub for goods bound for the U.S. market.
The proposed measures could disrupt the USMCA, which ensures largely tariff-free trade among the three countries. The deal, signed by Trump himself in 2020, replaced the North American Free Trade Agreement (NAFTA). However, Trump will have an opportunity to revisit the agreement in 2026 due to its “sunset” clause, which requires renegotiation or renewal.
In the aftermath of Trump’s announcement, he reportedly spoke with Canadian Prime Minister Justin Trudeau about trade and border security. A Canadian source familiar with the discussion described the exchange as constructive, stating, “It was a good discussion and they will stay in touch.”
Experts suggest Trump’s tariff threats may be intended to force an early renegotiation of the USMCA. William Reinsch, a former president of the National Foreign Trade Council, remarked, “This strikes me more as a threat than anything else. I guess the idea is if you keep hitting them in the face, eventually they’ll surrender.”
Mexico’s political leaders, however, cautioned against escalating trade tensions. Ricardo Monreal, a key figure in Mexico’s ruling Morena party, emphasized the need for diplomatic solutions, saying, “Escalating trade retaliation would only hurt the people’s pocketbooks and is far from solving underlying problems.” He proposed using institutional mechanisms to address issues such as human and drug trafficking.
Trump’s announcement affected global financial markets, sparking a rally for the U.S. dollar. The currency gained 1% against the Canadian dollar and 1.6% against the Mexican peso. Meanwhile, stock markets in Asia and Europe declined, although U.S. S&P 500 futures showed minimal change.
China, another target of Trump’s proposed tariffs, has faced criticism from the president-elect over its role in the flow of illegal drugs into the United States. Trump stated, “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.”
In response, a Chinese embassy spokesperson in Washington emphasized the mutually beneficial nature of U.S.-China trade and warned against the risks of trade wars. “No one will win a trade war or a tariff war,” said Liu Pengyu. The embassy also highlighted measures China had taken to address fentanyl production following a 2023 U.S.-China meeting, describing claims of deliberate inaction as baseless.
The Chinese foreign ministry expressed a willingness to collaborate with the U.S. on anti-drug efforts, provided the partnership is based on “equality, mutual benefit, and mutual respect.” A ministry statement urged the U.S. to value existing progress in drug control cooperation and preserve the “hard-won sound situation of Sino-U.S. drug control cooperation.”
Chinese Vice President Han Zheng, speaking at a supply chain expo in Beijing, underscored China’s commitment to global economic stability. He stated that China is prepared to work with other nations to foster an open world economic system and safeguard international supply chains. This comes at a time when China’s economy is grappling with challenges such as a prolonged property market downturn, mounting debt, and weak domestic demand.
During his campaign, Trump floated additional tariff proposals, including blanket duties of 10% to 20% on nearly all imports and tariffs as high as 200% on cars crossing the U.S.-Mexico border. Mexico’s finance ministry responded by highlighting the economic ties between the two nations, stating, “Mexico is the United States’ top trade partner, and the USMCA provides a framework of certainty for national and international investors.”
Economists have raised concerns about Trump’s overall tariff strategy, viewing it as one of his most impactful economic policies. They warn that such measures could drive U.S. import duties to levels not seen since the 1930s, leading to inflation, disruptions in U.S.-China trade, retaliatory actions from other nations, and significant changes to global supply chains.
Trump’s proposed tariffs reflect his campaign’s “America First” stance but risk straining relationships with key trading partners and violating existing agreements. While his threats may be part of a broader negotiation strategy, they have already prompted strong reactions from global markets and political leaders. Whether these plans will achieve their intended goals or result in broader economic consequences remains to be seen.
