Trump Targets Canada, Mexico, and China with Massive Tariffs

President-elect Donald Trump on Monday unveiled plans to implement significant tariffs on the United States' top three trading partners—Canada, Mexico, and China—following through on campaign promises that could potentially spark trade wars.

Trump, set to take office on January 20, 2025, announced a 25% tariff on Canada and Mexico, contingent on them addressing issues like drug trafficking, particularly fentanyl, and illegal immigration. This move would likely breach the terms of the USMCA, the trade agreement Trump signed in 2020, which allows for largely duty-free trade between the U.S., Mexico, and Canada. Trump could renegotiate this deal in 2026, when a provision in the agreement mandates talks about possible changes or withdrawal.

The tariff threat prompted a rally in the U.S. dollar, which rose 1% against the Canadian dollar and 2% against the Mexican peso. Meanwhile, equity markets in Asia and Europe saw declines. Trump also engaged in a conversation with Canada's Prime Minister Justin Trudeau to discuss trade and border security.

On China, Trump accused Beijing of not doing enough to halt the flow of illicit drugs, particularly fentanyl, into the U.S. He proposed a 10% additional tariff on Chinese goods until China takes stronger action. China responded by stating that economic cooperation between the two nations is mutually beneficial and warned that trade wars are not in anyone’s best interest. 

Trump had previously proposed even more aggressive tariffs on China, including plans to remove China’s most-favored-nation status and impose tariffs as high as 200% on cars crossing the U.S.-Mexico border. Economists warn that Trump's tariff plans could revive import duties to 1930s levels, resulting in inflation, disrupted global supply chains, and potential retaliation from trading partners. These tariffs would likely be passed on to consumers or result in lower profits for companies.

Trump asserts that Mexico and Canada would "pay a very big price" as a result of these new tariff measures, which are part of his broader economic strategy to "put America first."

Paraphrasing text from "Reuters" all rights reserved by the original author.