President-elect Donald Trump promised massive hikes in tariffs on goods coming from Mexico, Canada, and China on Monday, starting on the first day of his administration, a policy that could sharply increase costs for American businesses and consumers.
The move, Trump said, will be in retaliation for illegal immigration and “crime and drugs” coming across the border.
“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,” Trump posted on his Truth Social platform. “This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
Trump said America’s neighbors can “easily solve this long-simmering problem.”
Similarly, Trump said that China will face higher tariffs on its goods – by 10% above any existing tariffs – until it prevents the flow of illegal drugs into the United States.
“I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail,” Trump posted on Truth Social.
The president-elect claimed in the post that Chinese officials promised him the country would execute drug dealers caught funneling drugs into the United States but “never followed through.”
Responding to Trump’s announcement, Chinese Embassy spokesperson Liu Pengyu said his country has been in communication with the US about counternarcotics operations and that “the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”
“About the issue of US tariffs on China, China believes that China-Us economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a tariff war,” Liu said in a statement to CNN.
CNN has reached out to the embassies of Mexico and Canada for comment.
Canadian officials responded to the announcement in a statement posted to X on Monday night, saying that their country “places the highest priority on border security and the integrity of our shared border” and is “essential to US domestic energy supply.”
“We will, of course, continue to discuss these issues with the incoming administration,” Canada’s Deputy Prime Minister Chrystia Freeland and Public Safety Minister Dominic LeBlanc said in the statement.
The punishing tariffs, if enacted, could wreak havoc on America’s supply chains and industries reliant on goods from the country’s closest trading partners.
“The measures proposed this evening could hit a number of strategic US industrial sectors hard, add approximately $272 billion a year to tax burdens, raise goods prices, lift interest rates, and sap strength in an already-vulnerable household sector,” said Karl Schamotta, chief market strategist at Corpay Cross-Border Solutions.
Immediately after the announcement, the Canadian dollar fell 1.2% against the US dollar, and the Mexican peso fell 2% against the dollar, but both recovered some of their losses Tuesday morning. China’s yuan, though controlled by the government, traded higher – above 7.6% – in offshore markets.
Although investors believed the tariffs could ultimately strengthen the dollar, America’s financial markets took a hit, too. The extraordinary tariffs would raise costs dramatically for Americans for everyday goods that had previously come over the border without any import taxes.
