Trump Plans to Impose 25% Import Tariffs on Canada and Mexico Once in Office

The move, which could disrupt the USMCA trade agreement, has sparked varied reactions. Mexico warned of potential retaliation, and Canada convened an emergency meeting to address the economic fallout.

President-elect Donald Trump announced plans to impose new 25% import tariffs on all goods from Canada and Mexico upon taking office. On his social media platform, Truth, Trump accused his two neighbouring countries—and USMCA partners—of facilitating illegal immigration and fentanyl abuse in the U.S.

"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 stated.

A Canadian government official told the BBC that Trump and Trudeau had a 10-minute call, during which Trudeau highlighted that the number of migrants entering the U.S. from Canada was significantly less than those crossing the U.S.-Mexico border.

The United States is Canada’s largest trading partner, and in 2023, Canada exported goods worth nearly C$600 billion to the U.S.

Trudeau calls an emergency meeting with premiers

Following Trump’s social media post, Canadian Prime Minister Justin Trudeau held an emergency meeting with Canada’s provincial premiers.

Trudeau said he had a “good” conversation with Trump to ease concerns about a significant economic impact on Canada.

However, he did not say if Canada would impose retaliatory import tariffs.

On the other hand, Canadian premiers expressed cautious doubt about Trump's assertions on immigration and drug trafficking. They also warned that a trade war would cause significant harm to their particular economies.

Doug Ford, the premier of Ontario and head of Canada’s largest provincial economy, held Trump’s threats as "unfair” and found it "insulting” to equate Canada with Mexico when it comes to immigration and drugs.

A second term, a second round of import tariffs

This is not the first time Trump has levied import tariffs on Canada.

In June 2018, during his first term as president, Trump imposed a 25% tariff on Canadian steel and a 10% tariff on aluminum for alleged concerns about national security.

In response, Canada hit the U.S. with retaliatory import tariffs on American products, including agricultural goods and consumer items. The Canadian government also announced subsidies of C$1.5 billion to support the country’s steel and aluminum industries.

The tariffs were eventually negotiated and removed in May 2019, helping restore stability to the strong trade relationship between the two countries.

These earlier disputes, while resolved, set a precedent for the trade tensions now resurfacing.

Reactions to the planned import tariffs

The proposed import tariffs have sparked varied reactions.

U.S. Republican lawmakers praised the strategy as a strong negotiating tactic to compel Mexico and Canada to take more decisive action on border security and drug control.

Conversely, Mexican President Claudia Sheinbaum has warned of potential retaliatory measures. She expressed concerns about potential inflation and job losses in both Mexico and the U.S. if import tariffs are imposed.

In a letter to Trump, Sheinbaum said, "One tariff will follow another in response and so on, until we put our common businesses at risk."

Moreover, 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."

Economists also caution that such import tariffs could increase prices for American consumers, particularly in the food sector. They could also disrupt the USMCA, the trade deal that currently governs North American trade relations.

An additional 10% tariff on Chinese imports

In addition to targeting North American trade partners, Trump extended his focus to China to address fentanyl-related concerns.

Trump announced his plan to charge China another 10% tariff on top of existing import tariffs—until it cracks down on fentanyl smuggling.

“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,” Trump said. 

He claimed that, despite assurances, China still did not apply the death penalty to drug dealers.

In response, Liu Pengyu, a spokesperson for China’s embassy in the U.S., challenged Trump’s claim that China has done so little to curb the flow of fentanyl to the U.S.

He also said that the counternarcotics teams of both nations have been in regular communication since the November 2023 meeting between Chinese President Xi Jinping and U.S. President Joe Biden.

“No one will win a trade war or a tariff war,” Pengyu stated on social media platform X.

Please reach out to one of our trade professionals to discuss how these potential import tariffs could impact your business.