The information was shared by Mr. Donald Trump on the social network Truth Social on November 25. Mr. Trump said that the first of many executive orders he will issue when he officially takes office as US President on January 20, 2025, is to impose a 25% tax on all goods from Mexico and Canada.
The move would end the regional free trade agreement, according to NBC News. In 2023, more than 83% of Mexico's exports went to the US, and 75% of Canada's exports also went to the US. The new tariffs that Trump has said he will impose appear to violate the terms of the United States-Mexico-Canada Agreement (USMCA), which Trump signed into law in 2020.
Mr. Trump pointed out that illegal immigration and drug trafficking are the reasons why the US will impose tariffs on these countries.
Fentanyl is a synthetic opioid that causes tens of thousands of overdose deaths in the United States each year. Reducing the supply of the drug, whose precursors are mainly produced in China and Mexico, is an area where Washington and Beijing have agreed to cooperate. Mr Trump said that if the issue is not resolved, “we will impose an additional 10% tariff on China, on top of any additional tariffs, on many of its products entering the United States”. In response to the news of the possible tariffs when Mr Trump officially takes office, the Mexican Finance Ministry stressed: “Mexico is a leading trading partner of the United States and the USMCA provides a solid framework for domestic and international investors”. Spokesperson for the Chinese Embassy in Washington Liu Pengyu said: “China believes that China-US economic and trade cooperation is win-win in nature. No one will win in a trade war or a tariff war.” The embassy also said Beijing agreed to block exports of items related to the production of the opioid fentanyl, a leading cause of drug overdoses in the United States.
When campaigning for US president, Mr. Trump threatened to impose a 60% tax on Chinese goods.
Goldman Sachs’ Kinger Lau told CNBC that the 10% tariff on China is lower than the 20% to 30% that the market had expected. He said that China will cut interest rates, increase fiscal stimulus and moderately depreciate the yuan to counter the economic impact of the US tariff hike.
Mexico is the US's largest trading partner, followed by Canada and China - US data as of September 2024. According to Chinese customs data, the US is China's largest trading partner by country. China's largest regional trading partners are the Association of Southeast Asian Nations (ASEAN) and the European Union (EU).
According to Reuters, economists say that Mr. Trump's overall tariff plans, which could be his most consequential economic policy, would push US import tariffs to 1930s levels, causing inflation, collapsing US-China trade, leading to retaliation and a drastic rearrangement of global supply chains.
