Trump Threatens New Tariffs on Mexico, Canada, and China, Sparking Global Concerns

President-elect Donald Trump has unveiled plans to impose sweeping tariffs on Mexico, Canada, and China immediately after taking office, a move aimed at curbing illegal immigration and drug trafficking. The proposed measures mark a sharp escalation in trade tensions with three of the United States’ largest trading partners and have prompted warnings of economic repercussions.

Trump announced he would sign an executive order on January 20, 2025, imposing a 25% tariff on goods from Mexico and Canada. The tariffs will remain until both countries “clamp down” on fentanyl production and illegal border crossings. Simultaneously, Trump plans a 10% tariff on Chinese goods, which he says will pressure Beijing to take stronger action against fentanyl smuggling.

The proposed tariffs could significantly disrupt trade, as the three nations account for nearly 40% of the $3.2 trillion in goods imported by the U.S. annually. Critics warn that the tariffs may backfire, raising costs for American consumers and straining supply chains.

Mexico’s finance ministry emphasised the economic interdependence of the two countries, noting that more than 80% of Mexico’s exports go to the U.S. Similarly, Canada, which sends about 75% of its exports to its southern neighbour, expressed concerns. Meanwhile, Trump’s additional tariff on China comes as Beijing faces economic challenges, including a property crisis and rising debt. Chinese officials rebuffed the accusations, with a spokesperson for the Chinese embassy stating, “No one will win a trade war or a tariff war.”

Economists have criticised Trump’s reliance on tariffs, arguing that they function as a domestic tax that often raises prices for consumers. Studies from his first term showed the economic burden of tariffs fell largely on U.S. businesses and households.

Adding to the controversy, the planned measures may violate the U.S.-Mexico-Canada Agreement (USMCA), a trade deal Trump himself signed into law in 2020, which preserved largely duty-free trade among the three countries.