Trump 2.0: Donald threatens tariff war with Canada, China and Mexico
Virendra Pandit
New Delhi: US President-elect Donald Trump, who is set to take office on January 20, 2025, has vowed to clamp big tariffs on China, Canada, and Mexico over alleged drug smuggling and immigration issues, which could potentially trigger trade wars and inflation, the media reported on Tuesday.
He said he would impose a 25 percent tariff on Canada and Mexico until they clamp down on drugs and migrants crossing the border into the USA. He also outlined an “additional 10 percent tariff, above any additional tariffs” on China.
Trump said on Monday he would impose a 25 percent tariff on Canada and Mexico until they clamp down on drugs, particularly fentanyl, and migrants crossing the border, in a move that would appear to violate a free-trade deal.
He also outlined “an additional 10 percent tariff, above any additional tariffs on China”, in some of his most specific comments on how he will implement his economic agenda since winning the November 5 election on promises to “put America First,” and “Make America Great Again (MAGA).”
“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25 percent Tariff on ALL products coming into the United States, and its ridiculous Open Borders,” he said in a post on Truth Social.
More than 83 percent of exports from Mexico, and 75 percent from Canada went to the US in 2023.
Trump’s threatened new tariff could violate the terms of the US-Mexico-Canada Agreement (USMCA) on trade. The deal that Trump signed into law took effect in 2020 and continued the largely duty-free trade between the three countries.
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.”
Trump also accused Beijing of not taking strong enough action to stop the flow of illicit drugs crossing the border into the US from Mexico.
“Until they stop, we will be charging China an additional 10 percent tariff, above any additional tariffs, on all of their many products coming into the United States of America,” Trump said.
A Chinese embassy spokesperson in Washington hit back, stating that “China believes that China-US economic and trade cooperation is mutually beneficial. No one will win a trade war or a tariff war,” Liu Pengyu said.
It also cited steps 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 United States.
“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 spokesperson said.
Earlier, Trump pledged to end China’s most-favored-nation trading status and slap tariffs on Chinese imports over 60 percent- – much higher than those imposed during his first term (2017-20).
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 his election this month, Trump floated plans for blanket tariffs of 10 percent to 20 percent on virtually all imports, adding he would put tariffs as high as 200 percent on every car coming across the US-Mexico border.
Some economists think 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 said 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 Monday that Mexico and Canada will “pay a very big price.”
