Trumps threatens tariffs on February 1st in Canada, Mexico and China

When President Trump failed to follow through on his promise to impose new tariffs on his first day in office, business executives and others who support international trade sighed.

That relief didn’t last long. On Monday night, just hours after his inauguration speech, Mr Trump said he planned to impose tariffs of 25 per cent on products from Canada and Mexico from February 1, saying that countries have allowed “large amounts of people and fentanyl” into the United States.

On Tuesday evening, Mr Trump said he would impose an additional 10 per cent tariff on Chinese products on the same date, accusing China of sending fentanyl to Mexico and Canada, which then crossed into the US.

Mr Trump’s threat comes just 10 days before he imposes significant tariffs on three of the US’s biggest trading partners, a move that could strain US diplomatic ties and the chain global supply.

Mexico, China and Canada account for one-third of the goods and services imported or purchased from the United States, supporting tens of millions of American jobs. Together, the countries bought more than $1 trillion in exports and provided nearly $1.5 trillion in goods and services to the United States by 2023, government data showed last year.

While the US has long used tariffs to punish unfair trade practices, Trump’s first use of them aims at a completely different outcome: strengthening US borders against immigrants and refugees. – illegal drugs.

These goals may mean that Mr. Trump, or they are more likely to be removed if they are in power. That’s in contrast to other tariffs planned by his team, which seeks to restore global supply chains and raise government revenue.

It is also not clear which products the payment will be applied to if imposed. A person familiar with the Trump administration’s visit said they were considering tariffs on all imports from those countries, as well as looking at tariffs on specific goods, such as cars, steel and aluminum. The Trump administration did not immediately respond to a request for comment.

The stock market avoided the announcement of Mr. Trump and closed yesterday at an all-time high.

Officials in Canada, Mexico and China have been working to develop a list of US products they could impose retaliatory tariffs on, should Mr Trump choose to go ahead.

But answering Mr. They are also Trump in a way that says his threat to pay is working. The Canadian and Mexican governments in particular rushed to try to stop the tariffs, sending officials to assure Trump’s team that they were trying to address their concerns.

The Mexican government has expanded immigration enforcement efforts and increased seizures of illegal opioids. Canada has also committed new resources to monitor its borders, including the deployment of two new Blackhawk helicopters and the purchase of 60 US drones to monitor the border. Canada’s immigration department says illegal crossings have dropped 86 percent in the past two months as a result of tightening visa rules. Illegal crossings at the US-Mexico border are near a four-year low.

It was unclear whether the Chinese government had taken any new steps in response to Mr. Trump’s latest tariff threat, but Mr. Trump said he discussed fentanyl, trade and other issues in a phone call with last Friday with Chinese leader Xi. Jinping.

The Chinese government made a commitment to the United States, during the administration of Trump and Biden, to stop the export of fentanyl and precursors. During Mr. Trump’s first term, China introduced a ban on fentanyl and began coordinating efforts with the United States to arrest traffickers. And in 2023, Mr. Xi and former President Joseph R. Biden Jr. agreed to a series of bilateral drug talks after meeting in Woodside, Calif.

Asked whether the United States and China had discussed the possibility of a 10 percent tariff on Chinese products, Mao Ning, a spokesman for China’s foreign ministry, told the news outlet in Beijing on Wednesday that China is “ready” to engage with the United States. States to expand cooperation and manage the differences between the two countries.

“We always believe there are no winners in a tariff or trade war,” he added. “We will always strongly defend the national interests”.

In a Senate confirmation hearing last week, Treasury Secretary Scott Bessent listed three main reasons the Trump administration could raise wages. . Some tariffs may be aimed at redressing unfair trade practices, while others may increase revenue for the federal budget.

He added that Mr. Trump, as a skilled negotiator, “added a third function to wages.” The fee could be used in negotiations, including with Mexico over the fentanyl crisis, he said.

Douglas A. Irwin, an economic historian at Dartmouth College, says there have been few instances in history in which American leaders have linked trade activities to non-trade objectives – apparently President Nixon limited the return of Okinawa to Japan by imposing export restrictions. on canvas – that Mr Trump is “very transparent and communicative in his approach.” “It’s very unique and unusual,” he said.

Business owners have expressed concern about the potential for new fees. Economists estimate that a 25 percent tariff on goods from Canada and Mexico could reduce the size of the U.S. economy by hundreds of billions of dollars, as well as potentially void trade agreements. among the three countries, which require their members to abstain from it. moving.

The economies of Mexico and Canada in particular are closely linked to the US economy. The diverse supply chain of goods is concentrated across North American borders, moving between fields, factories and stores in each country as they transform from raw materials to finished products.

A single vehicle and its parts may cross the US-Canada border multiple times after being assembled. A pair of bluejeans can be made of cotton, fabric and buttons from the United States, but they are sewn in a factory in Mexico. US farmers send corn and soybeans south of the border for packaged foods and animal feed; Mexican farms send American grocery stores cheap avocados, mangoes and tomatoes, even in winter.

If a 25 percent tariff were added every time one of these products crossed the U.S. border, it would significantly increase the cost of goods purchased by Americans and even force American manufacturers to close operations.

“The supply chain challenges we’ve faced in recent years pale in comparison to those on the horizon,” said Jonathan Colehower, director of global supply chain management at UST. , a consulting firm.

The threat of tariffs is reminiscent of what happened during Mr. Trump’s first term. In the spring of 2019, Mr. Trump vowed to close the U.S. border with Mexico, then threatened a 5 percent tariff on all Mexican products, which could rise to 25 percent. unless the country restricts the movement of migrants and asylum seekers. Mr. Trump ultimately decided not to follow through on those threats.

Matina Stevis-Gridneff SY Siyi Zhao contributed to research and reporting.