Trump puts tariffs on Canada, Mexico and China
The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA).
Until the crisis is alleviated, President Donald J. Trump is implementing a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China. Energy resources from Canada will have a lower 10% tariff.
President Trump is taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.
The orders make clear that the flow of contraband drugs like fentanyl to the United States, through illicit distribution networks, has created a national emergency, including a public health crisis. Chinese officials have failed to take the actions necessary to stem the flow of precursor chemicals to known criminal cartels and shut down money laundering by transnational criminal organizations.
In addition, the Mexican drug trafficking organizations have an intolerable alliance with the government of Mexico. The government of Mexico has afforded safe havens for the cartels to engage in the manufacturing and transportation of dangerous narcotics, which collectively have led to the overdose deaths of hundreds of thousands of American victims. This alliance endangers the national security of the United States, and we must eradicate the influence of these dangerous cartels.
There is also a growing presence of Mexican cartels operating fentanyl and nitazene synthesis labs in Canada. A recent study recognized Canada’s heightened domestic production of fentanyl, and its growing footprint within international narcotics distribution
USING OUR LEVERAGE TO ENSURE AMERICANS’ SAFETY: Previous Administrations failed to fully leverage America’s economic position as a tool to secure our borders against illegal migration and combat the scourge of fentanyl, preferring to let problems fester.
Access to the American market is a privilege. The United States has one of the most open economies in the world, and the lowest average tariff rates in the world.
While trade accounts for 67% of Canada’s GDP, 73% of Mexico’s GDP, and 37% of China’s GDP, it accounts for only 24% of U.S. GDP. However, in 2023 the U.S. trade deficit in goods was the world’s largest at over $1 trillion.
Tariffs are a powerful, proven source of leverage for protecting the national interest. President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first.
Though previous Administrations have failed to leverage America’s combination of exceptional strength and its unique role in world trade to advance the security interests of the American people, President Trump has not.
PRESIDENT TRUMP IS KEEPING HIS PROMISE TO STOP THE FLOOD OF ILLEGAL ALIENS AND DRUGS: When voters overwhelmingly elected Donald J. Trump as President, they gave him a mandate to seal the border. That is exactly what he is doing.
The Biden Administration’s policies have fueled the worst border crisis in U.S. history.
More than 10 million illegal aliens attempted to enter the United States under Biden’s leadership, including a rising number of Chinese nationals and people on the terror watchlist.
This problem is not confined to the southern border – encounters at the northern border with Canada are rising as well.
The sustained influx of illegal aliens has profound consequences on every aspect of our national life – overwhelming our schools, lowering our wages, reducing our housing supply and raising rents, overcrowding our hospitals, draining our welfare system, and causing crime.
Gang members, smugglers, human traffickers, and illegal drugs and narcotics of all kinds are pouring across our borders and into our communities.
Last fiscal year, Customs and Border Protection (CBP) apprehended more than 21,000 pounds of fentanyl at our borders, enough fentanyl to kill more than 4 billion people.
It is estimated that federal officials are only able to seize a fraction of the fentanyl smuggled across the southern border.
These drugs kill tens of thousands of Americans each year, including 75,000 deaths per year attributed to fentanyl alone.
More Americans are dying from fentanyl overdoses each year than the number of American lives lost in the entirety of the Vietnam War.
BUILDING ON PAST SUCCESS: President Trump continues to demonstrate his commitment to ensuring U.S. trade policy serves the national interest.
As President Trump said in the Presidential Memorandum on American First Trade Policy, trade policy is a critical component in national security.
President Trump promised in November to “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. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
During his first term as President of the United States, President Trump established the President’s Commission on Combating Drug Addiction and the Opioid Crisis and declared the Opioid Crisis a public health emergency.
President Trump also has a long record of putting America first on trade. In his first term, President Trump successfully used threats of tariffs on Mexico to help secure our border.
When our national security was threatened by a global oversupply of steel and aluminum, President Trump took swift action to protect America’s national security by implementing tariffs on imports of these goods.
In response to China’s intellectual property theft, forced technology transfer, and other unreasonable behavior, President Trump acted with conviction to impose tariffs on imports from China, using that leverage to reach a historic bilateral economic agreement.
Just last week, President Trump leveraged tariffs to successfully resolve national security concerns with Colombia, swiftly reaching an outcome that prioritizes the safety and security of the American people and the sanctity of our national borders.
WASHINGTON (AP) — President Donald Trump on Saturday signed an order to impose stiff tariffs on imports from Mexico, Canada and China, drawing swift retaliation and an undeniable sense of betrayal from the country’s North American neighbors as a trade war erupted among the longtime allies.
The Republican president posted on social media that the tariffs were necessary “to protect Americans,” pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal immigration into the U.S.
The tariffs, if sustained, could cause inflation to significantly worsen, threatening the trust that many voters placed in Trump to lower the prices of groceries, gasoline, housing, autos and other goods as he promised. They also risked throwing the global economy and Trump’s political mandate into turmoil just two weeks into his second term.
“THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump wrote. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
Canadian crude oil will be subject to a lower, 10% tariff, which could mitigate the effect on U.S. gasoline prices. Midwestern oil refineries are heavily dependent on Canadian crude.
The import taxes could result in higher prices for a wide range of products, including fruits and vegetables, flat screen TVs, and auto parts. The targeted countries have said they will respond with retaliatory tariffs of the own on U.S. exports.
Business groups started to react immediately after the announcement. A trade group representing the liquor industry said the tariffs would hurt jobs.
“Since the 1990s, trade in spirits in North America has been largely tariff-free, resulting in significant growth. U.S.-Canada trade in spirits increased by 147%, while U.S.-Mexico trade surged by 4,080%,” according to a joint statement by the Distilled Spirits Council of the U.S., the Chamber of the Tequila Industry, and Spirits Canada.
The group said that the products are distinctive to each country and the tariffs would hurt the domestic industries. Bourbon and Tennessee Whiskey can only be made in the U.S., Tequila in Mexico, and Canadian Whisky in Canada.
The American Fuel & Petrochemical Manufacturers, an industry trade group, warned in a statement on Saturday that a higher cost to import crude oil from Canada and Mexico — as well as other Canadian energy products — could mean that American consumers will end up paying more for energy.
“We are hopeful a resolution can be quickly reached with our North American neighbors so that crude oil, refined products and petrochemicals are removed from the tariff schedule before consumers feel the impact,” AFPM president and CEO Chet Thompson said.
China, Canada and Mexico respond
On Sunday, in coordinated statements from China’s foreign ministry and commerce ministry, Beijing denounced the tariffs and said China would take unspecified “corresponding countermeasures.” The commerce ministry said the tariffs were a serious violation of World Trade Organization rules, and said it would launch a legal challenge at the WTO. The foreign ministry said China has taken steps to help the U.S. deal with fentanyl, which it said was ultimately a U.S. problem, and said the imposition of tariffs “will inevitably affect and undermine future cooperation between the two sides on anti-drug issues.”
Canadian Prime Minister Justin Trudeau, in a public appearance on Saturday, lamented the impending U.S. tariffs on Canadian goods and warned American consumers that they would see prices rise.
“This is a choice that, yes, will harm Canadians, but beyond that it will have real consequences for you, the American people,” Trudeau said.
“If President Trump wants to usher in a new golden age for the United States, the better path is to partner with Canada — not to punish us,” he added.
Canada’s government announced that it would impose 25% retaliatory tariffs on a variety of U.S. products, starting with appliances, clothing, wine and spirits, orange juice, peanut butter and motorcycles.
Canadian tariffs on $30 billion in goods imported from the U.S. are set to take effect on Tuesday, while tariffs on another $125 billion-worth of goods will be imposed later. Officials said that “additional measures, including non-tariff options,” would remain on the table as long as the U.S. continued to impose new import costs on its northern neighbor.
Trudeau said that although fewer than 1% of illegal border crossings and less than 1% of fentanyl into the U.S. come from Canada, the country had launched a $1.3 billion effort to further secure its shared border with the U.S. in December.
Mexican president Claudia Sheinbaum said on Saturday that she had directed her Secretary of the Economy to implement a plan that includes tariffs and non-tariff measures, but did not share additional details.
In a post on X, Sheinbaum said the Mexican government had seized 40 tons of drugs in the past four months and also blamed U.S. gun sellers for arming Mexican drug cartels.
Sheinbaum proposed that Mexico and the U.S. instead form a working group rather than impose retaliatory economic measures on each other. “Mexico does not want confrontation,” she said.
How American shoppers and companies are preparing
Businesses and shoppers in the U.S. had already started making contingency plans. Trade data released earlier this week showed a sharp rise in imports in December, suggesting some companies tried to stockpile goods before any tariffs take effect.
Some individual shoppers also tried to beat the tariffs. Personal spending on durable goods such as autos and televisions jumped in December, according to figures released Friday by the Commerce Department. Mexico is a leading producer of flat-screen TVs.
Tariffs have come up more than 200 times on corporate earnings calls this month.
The auto industry is expected to be particularly hard hit because it is highly integrated, relying on manufacturing in all three countries.
General Motors told financial analysts on Tuesday that it could shift some pickup truck production out of Mexico and Canada if tariffs are imposed. But the automaker is reluctant to act while the trade landscape is still uncertain.
“We are prepared to mitigate near-term impacts,” said CEO Mary Barra. “What we won’t do is spend [a] large amount of capital without clarity.”
China’s economy rebounded in the last three months of last year, allowing the government to meet its growth target of 5% in 2024, Beijing announced on Friday.
But it is one of the slowest rates of growth in decades as the world’s second largest economy struggles to shake off a protracted property crisis, high local government debt and youth unemployment.
The head of the country’s statistics bureau said China’s economic achievements in 2024 were “hard won,” after the government launched a slew of stimulus measures late last year.
Beijing has rarely missed its growth targets in the past.
Experts had broadly predicted this rate of growth. The World Bank said lower borrowing costs and rising exports would mean China could achieve annual growth of 4.9%.
Investors, however, are bracing themselves: the threat of President-elect Donald Trump’s tariffs on $500bn (£409bn) worth of Chinese goods looms large.
Yet that is not all that stands in the way of China achieving its growth targets next year.
Business and consumer confidence is low, and the Chinese yuan will continue to weaken as Beijing cuts interest rates in a bid to boost growth.
Here are three reasons why Xi has bigger challenges than Trump’s tariffs:
1. Tariffs are already hurting Chinese exports
There is a growing chorus of warnings that China’s economy will slow in 2025. One major driving factor of last year’s growth is now at risk: exports.
China has relied on manufacturing to help exit the slowdown – so, it has been exporting a record number of electric vehicles, 3D printers and industrial robots.
The US, Canada and the European Union have accused China of making too many goods and imposed tariffs on Chinese imports to protect domestic jobs and businesses.
Experts say Chinese exporters may now focus on other parts of the world. But those countries are likely to be in emerging markets, which don’t have the same levels of demand as North America and Europe.
That could impact Chinese businesses that are hoping to expand, in turn hitting suppliers of energy and raw materials.
Xi wants to transform China from the world’s factory for cheap goods into a high-tech powerhouse by 2035 but it’s unclear how manufacturing can continue to be such a big growth driver in the face of rising tariffs.
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2. People are just not spending enough
In China, household wealth is largely invested in the property market. Before the real estate crisis, it accounted for almost a third of China’s economy – employing millions of people, from builders and developers to cement producers and interior designers.
Beijing has implemented a slew of policies to stabilise the property market and the the financial markets watchdog, the China Securities Regulatory Commission (CSRC), has said it will vigorously support reforms.
But there are still too many empty homes and commercial properties, and that oversupply continues to force down prices.
The property market slump is expected to bottom out this year, but Wall Street banking giant Goldman Sachs says the downturn will be a “multi-year drag” on China’s economic growth.
It’s already hit spending hard – in the last three months of 2024, household consumption contributed just 29% to China’s economic activity, down from 59% before the pandemic.
That is one of the reasons Beijing has stepped up exports. It wants to help offset sluggish domestic spending on new cars, luxury items and almost everything else.
The government has even introduced programmes like consumer goods trade-ins, where people can exchange their washing machines, microwaves and rice cookers.
But experts wonder whether these kinds of measures alone are sufficient without addressing deeper issues in the economy.
They say people will need more money in their pockets before pre-Covid levels for spending return.
“China needs to bring back the animal spirit of the population and we are still far from that,” said Shuang Ding, Chief Economist for Greater China and North Asia at Standard Chartered Bank.
“If the private sector starts to invest and innovate that could increase income and the job outlook, and people will have more confidence to consume.”
Steep public debt and unemployment have also affected savings and spending.
Official figures suggest the youth jobless rate remains high compared to before the pandemic, and that wage rises have stalled.
3. Businesses are not flocking to China like they used to
President Xi has promised to invest in the cutting-edge industries that the government calls “new productive forces”.
Until now, that has helped China become a leader in goods like renewable energy products such as solar panels and electric vehicle batteries.
Last year, China also overtook Japan as the world’s biggest car exporter.
But the lacklustre economic picture, uncertainty over tariffs and other geopolitical uncertainties mean the appetite of foreign businesses for investment in China is subdued.
It’s not about foreign or domestic investment – it’s that businesses don’t see a bright future, said Stephanie Leung from wealth management platform StashAway.
“They would like to see a more diversified set of investors coming in.”
For all of these reasons, experts believe the measures to support the economy will only partially alleviate the impact of potential new US tariffs.
Beijing must either undertake big, bold measures or accept that the economy is not going to grow so fast, Goldman Sachs’ Chief China Economist Hui Shan wrote in a recent report, adding: “We expect them to choose the former.”
“China needs to stabilise property markets and create sufficient jobs to ensure social stability,” Mr Ding from Standard Chartered Bank said.
According to researcher China Dissent Monitor, there were more than 900 protests in China between June and September 2024 led by workers and property owners – 27% more than the same period a year earlier.
These sort of social strains as a result of economic grievances and an erosion of wealth will be a concern for the Chinese Communist Party.
After all, explosive growth turned China into a global power, and the promise of increased prosperity has largely helped its leaders keep a tight lid on dissent.