President-elect Donald Trump said on Monday he will issue executive orders imposing new tariffs on all imported goods from China, Mexico and Canada, the nation’s three largest trading partners, as one of his first acts on Inauguration Day.
Trump said the tariffs of 25 percent on Mexican and Canadian goods, and 10 percent on Chinese merchandise would be aimed at halting an “invasion” of drugs and migrants into the United States.
“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!” Trump wrote in a post on Truth Social, his social media site.
In a second post, Trump blasted Chinese leaders for not following through on earlier promises to impose the death penalty on fentanyl producers in China.
The threatened tariffs will affect large swaths of U.S. trade. Goods valued at more than $1.5 trillion move among the three North American nations, while the United States and China exchange about $600 billion worth.
Monday’s social media posts represent Trump’s most detailed comments on his tariff plans since his election victory this month. He said that on Jan. 20, he will sign “all necessary documents” to impose the import taxes via executive orders.
During the campaign, he vowed to impose tariffs of up to 60 percent on Chinese imports, plus a 10 to 20 percent levy on products from other countries.
John Veroneau, a former trade negotiator under President George W. Bush, said the announced tariffs would violate U.S. trade commitments.
Under the United States-Mexico-Canada Agreement (USMCA), which took effect in 2020, goods moving among the three North American nations cross borders on a duty-free basis.
“Obviously, unilaterally imposing a 25 percent tariff on all trade blows up the agreement,” said Veroneau, a partner at Covington & Burling in Washington.
Each country affected by the president-elect’s plans is likely to retaliate with tariffs on U.S. goods, which will hurt exporters, he said.
Tariffs on Mexican and Canadian products will be especially disruptive for the auto industry. Half-finished vehicles often move across North American borders several times before they are completed. Adding a 25 percent fee to each movement could erode automakers’ profits or give consumers sticker shock.
USMCA replaced the 1994 North American Free Trade Agreement, which Trump criticized during his first presidential campaign. Trump publicly hailed the new accord on several occasions, boasting that it represented an enormous improvement over the original trade pact.
“The USMCA is the fairest, most balanced, and beneficial trade agreement we have ever signed into law. It’s the best agreement we’ve ever made,” he said in January 2020.
The treaty includes a provision for a review of its terms in 2026. The Trump team already has been eyeing potential changes designed to prevent China from using Mexico as an export base for its electric vehicles, steel and other goods.
This is not the first time that Trump has tried to use trade policy to address unrelated issues. In May 2019, he announced a series of escalating tariffs against Mexico designed to pressure the Mexican government into stopping Central American migrants from crossing its territory. Trump said he would impose a 5 percent tariff on Mexican goods, which would increase in 5 percent increments each month until the border problem was resolved.
The announcement sparked criticism from business representatives and some Senate Republicans at the time, who called it a misuse of the president’s tariff authority.
Little over a week later, Trump lifted the tariff threat, saying that Mexico had agreed to take “strong measures” to curb the influx.
Trump’s plan to use trade policy as a tool to address two of the nation’s most vexing and complex problems — drugs and immigration — drew praise from Bill Ackman, a hedge fund manager.
Trump “is going to use tariffs as a weapon to achieve economic and political outcomes which are in the best interest of America, fulfilling his America first policy,” Ackman wrote on X. “This is a great way for Trump to effect foreign policy changes even before he takes office.”
But Ernie Tedeschi, former chief economist for President Joe Biden’s Council of Economic Advisers, said the North American tariffs would cost the typical American household almost $1,000 per year.