Trump Proposes 25% Tariffs on Canada and Mexico
Click to start listening
Synopsis
Trump has announced a 25% tariff on Mexico and Canada starting February 1, a significant policy shift affecting trade and consumer prices in the US.
Key Takeaways
- Trump plans to impose 25% tariffs on Mexico and Canada effective February 1.
- This change could significantly impact prices for American consumers.
- Trump's broader trade policy includes measures against unfair trade practices.
- USMCA's effects on American workers will also be reviewed.
- Retaliatory tariffs from Mexico and Canada could harm US businesses.
Washington, Jan 21 (NationPress) US President Donald Trump announced during an Oval Office signing ceremony on Monday that his administration plans to implement 25 percent tariffs on both Mexico and Canada starting February 1. This significant shift in North American trade policy could lead to increased prices for American consumers.
During the ceremony, Trump also detailed his broader trade strategy for his second term, although this executive action was referred to by sources as a "placeholder" and does not yet put into effect the new global tariffs he initially promised.
As a candidate, Trump had suggested extensive tariffs: up to 20 percent on imports from all nations, with a 25 percent tax specifically on goods from Mexico and Canada, alongside a harsh 60 percent levy on imports from China. He committed to using tariffs as a bargaining chip with other nations, including Denmark, to exert pressure for United States control over Greenland.
When questioned about tariffs on China during the Oval Office event, Trump acknowledged that the extensive tariffs he had imposed previously remained in place under former President Joe Biden.
Regarding universal tariffs, he remarked, "We may, but we're not ready for that just yet."
Mexico and Canada rank as two of America's top three trading partners. Last year, the US imported goods worth $475 billion from Mexico and $418 billion from Canada, together making up 30 percent of the total value of US exports for the year, based on federal trade statistics.
Meanwhile, the US exported goods valued at $354 billion to Canada and $322 billion to Mexico, which accounted for a third of the total goods exported by the US in the same period. The tariffs Trump is looking to impose on these two countries may lead to retaliatory tariffs on US products, potentially impacting domestic businesses.
The executive order signed on Monday mandates that the secretaries of Commerce and Treasury, along with the United States Trade Representative, investigate the underlying causes of America’s trade deficits with foreign countries. They are also tasked with assessing how to establish an "External Revenue Service" to collect tariffs, identifying unfair trade practices, and reviewing existing trade agreements for possible enhancements.
Additionally, the order instructs government agencies to evaluate the effects of the US-Mexico-Canada Agreement (USMCA), which Trump signed during his first term, on American workers and businesses, and to consider whether the US should remain in this free trade agreement.
Trump's directive also requires agencies to explore if a stricter US trade policy could effectively reduce the flow of fentanyl and undocumented migrants into the United States.
"Americans deserve and benefit from an America First trade policy," stated Trump’s executive action.
He continued, "I am establishing a vigorous and revitalized trade policy aimed at promoting investment and productivity, enhancing our nation's industrial and technological advantages, safeguarding our economic and national security, and, most importantly, benefiting American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses."
This placeholder action emerges as Trump’s economic team engages in regular meetings to strategize how to implement the steep tariffs on both allies and adversaries that he has promised during his campaign.
While administration officials are still deliberating on how to fulfill these commitments, Trump made it clear in his inaugural address that he aims to significantly alter tariff policies — in one capacity or another.
During his inauguration ceremony on January 20, 2025, in Washington, DC, Trump declared, "I will promptly initiate the overhaul of our trade system to protect American workers and families."
He added, "Instead of taxing our citizens to benefit other nations, we will tax foreign countries to enrich our citizens."
Trump also mentioned plans to establish a new government office called the "External Revenue Service," responsible for collecting tariff incomes.
"It will result in significant sums of money flowing into our Treasury from foreign sources," he stated.
Market-oriented officials such as Scott Bessent, Trump's nominee for Treasury secretary, and Kevin Hassett, his choice to head the National Economic Council, have pushed for a more lenient approach. In contrast, tariff advocates like Peter Navarro, a White House trade advisor, and Howard Lutnick, Trump's nominee for the Commerce Department, argue for a full-force strategy to communicate the message Trump intends to convey.
Trump has been reaching out to allies in Congress to solidify support for tariffs, but the precise policy remains undecided.
However, these tariffs could lead to increased costs for Americans, who are already burdened by years of high inflation. Tariffs are typically paid by American firms importing foreign goods, but these expenses are often transferred to consumers through elevated prices.
