Trump threatens sweeping new tariffs on first day in office
Donald Trump has threatened sweeping new tariffs on Mexico, Canada and China on his first day in office.
The president-elect, who takes office on 20 January next year, said he would introduce a 25% tax on all products entering the country from Canada and Mexico.
Posting on his Truth Social platform he also threatened an additional 10% tariff on goods from China on top of any he might impose as one of his first executive orders.
What Trump’s tariffs could mean for UK, EU, China and the world
If implemented, the tariffs could raise prices for ordinary American consumers on everything from petrol to cars and agricultural products.
The US is the largest importer of goods worldwide and Mexico, China and Canada are its top three suppliers according to the country’s census data.
More than 83% of exports from Mexico went to the US in 2023 and 75% of Canadian exports go to the country.
“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,” Mr Trump said.
Trump says he ‘loves’ tariffs – but economists are worried
Donald Trump talked during the campaign a lot about how he loves tariffs – he said it’s his favourite word. When he talked to economists, they, generally speaking, hate tariffs because that imposes an extra kind of friction on trade. But it does seem very likely that when he comes into the White House, he’s going to impose them.
When you take a step back here, he does not like the fact that the US has a massive trade deficit – it imports far more stuff, physical stuff, than it exports. He feels that’s a failure. And China has this enormous trade surplus – China exports a lot more than it imports. So does Germany, and so does Europe as a whole. We in the UK have the same problem as America.
It raises big questions about the nature of the global economy, about whether the manufacturing base in the US is healthy, whether it could be better. But I think a lot of people are very nervous about the potential economic impact of this because, and I think part of the nervousness is, they look back at the 1930s. That was the last time you had nations around the world raising tariffs, raising tariffs, raising taxes, all these barriers to trade. And that was to some extent the economic spiral that contributed towards the Second World War. So they look at that, and they say: “We do not want to do that again”. And they hear Donald Trump say the word “tariffs” in an approving term, and they are horrified by it.
But the reality is he’s speaking about a global economic system that isn’t particularly working well either. And so I think it’s an interesting intellectual moment, but it’s also quite unnerving. You’ve got this moment where you’ve got war in Europe, you’ve got nervousness about the energy transition. You’ve got tensions around the world between the US and China. And you can understand why when people hear those words, they can be a bit scared.
He also spoke against an influx of illegal immigrants heading into the country.
While migrant arrests reached a record high during President Joe Biden’s administration, illegal crossings fell dramatically this year as new border restrictions were introduced and Mexico stepped up enforcement.
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Mr Trump added: “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!”
After issuing his tariff threat, Mr Trump spoke with Canadian Prime Minister Justin Trudeau and they were said to have discussed trade and border security.
“It was a good discussion and they will stay in touch,” a Canadian source said.
Turning to China, the president-elect said he “had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail”.
“Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” he wrote.
The Chinese Embassy in Washington said there would be losers on all sides if there is a trade war.
“China-US economic and trade cooperation is mutually beneficial in nature,” embassy spokesman Liu Pengyu posted on X. “No one will win a trade war or a tariff war.”
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Sky’s Asia correspondent, Nicole Johnston, said Mr Trump’s threats would put the economic relationship between Washington and Beijing firmly on the agenda.
“In the case of China, he [Mr Trump] mentioned an additional 10% tariff on China. It’s very unclear at this stage what that means.
“Is he talking about a 10% tariff on top of the 60% tariff he was threatening in the lead-up to the election? Is this bluster? Is this a negotiating tactic by Mr Trump to put the Chinese on notice?
She added: “This clearly shows in the lead up to his inauguration and into next year, the issue of the economic relationship and trade between the US and China is certainly going to be on the agenda.”
It is not clear if Mr Trump will actually go through with the threats.
He won the recent election in part due to voter frustration over inflation and high prices.
Mr Trump’s nominee for treasury secretary Scott Bessent – who if confirmed, would be one of a number of officials responsible for tariffs – has said previously that tariffs are a means of negotiation.