Donald Trump, now the president-elect, has put Canada and Mexico on notice, reiteratively threatening to impose significant tariffs on imports from both nations if they do not act on issues of illegal immigration and drug smuggling. According to his statements, if these countries do not committedly address the flow of drugs, particularly fentanyl, and migrants crossing the border, he plans to implement 25% tariffs on goods entering the U.S. from them right from his first day of presidency, January 20, 2025.
During his interview with NBC’s "Meet the Press," Trump insisted, "I'm a big believer in tariffs. I think tariffs are the most beautiful word.... It's going to make us rich," reinforcing his view of tariffs not just as economic tools, but as methods to achieve certain political and social objectives.
This declaration came alongside the announcement of additional tariffs on China—a country he also holds responsible for the fentanyl crisis impacting American communities. Trump indicated these tariffs would come with the demand for stricter enforcement against illegal activities. "We will be charging China an additional 10% tariff, above any additional tariffs," he stated, until there is significant progress.
The stakes are high as the U.S. is the world’s largest importer, with China, Canada, and Mexico making up approximately 40% of the $3.2 trillion worth of goods imported annually. A broad application of tariffs could disrupt supply chains significantly and escalate tensions with these top trading partners.
After the threats were made public, Prime Minister Justin Trudeau of Canada was quick to engage with Trump, reportedly discussing trade and security matters. Trudeau emphasized the relatively small scale of migrant crossings from Canada to the U.S. compared to those from Mexico, which Trump had highlighted as being part of the problem.
Mexican officials were similarly swift to respond. Mexico’s finance ministry pointed out the importance of the U.S. as their top trade partner and stated their commitment to maintaining the framework established under the United States-Mexico-Canada Agreement (USMCA), which they argue brings certainty to international business relationships.
Social reaction to Trump’s tariff threats has been mixed. A recent survey indicated two-thirds of Canadians would be less inclined to buy American products if tariffs are imposed on Canada. Meanwhile, some Canadians advocate diplomatic negotiations rather than immediate retaliatory actions, with many believing it could lead to job losses and inflated prices for consumers on both sides of the border.
Experts warn the impact of tariffs is usually felt by domestic consumers, as they function like taxes on imports. For example, if a vehicle worth $50,000 faces a 25% tariff, the added cost would be $12,500, translating directly to higher prices at dealerships for American buyers. Consequently, many economists suggest the ultimate burden rests on the consumers rather than the exporting countries.
Ken Cuccinelli, formerly of the Department of Homeland Security, voiced confidence in Trump's follow-through on these threats, reinforcing the sentiment among some political analysts about the very real potential for tariffs to shape U.S. trade policy under Trump's administration. He remarked, "One of the things people around the world know about Donald Trump is he will follow through on things like this."">
But what remains less clear is the specific requests Trump is making of Canada and Mexico to mitigate these tariff thrusts. Conversations between leaders highlight the tension as they negotiate the balance between border security measures and trade relations.
Discussions have arisen about the potential consequences of such tariffs. Doug Ford, the Premier of Ontario, condemned the tariffs, claiming they would devastate workers and jobs not only across Canada but also within the U.S. Gerardo Fernández, the leader of the Mexican Senate posed provocative questions about what retaliatory tariffs should be levied against the US until drug consumption and illegal arms exports are brought under control.
Trump's approach echoing past methods is intended as a negotiation tactic; working on the theory of "escalate to de-escalate". His earlier tenure featured multiple tariffs on Chinese goods, highlighting his perspective on using trade penalties as mechanisms for leveraging broader policy goals, including immigration reform and drug enforcement.
Many fear the consequences of such actions might lead to hostile trade relations, causing reverberations throughout the economy. The dark cloud of trade wars lies overhead, with Trump’s potential policy set to reignite increasing concerns about the stability and future of trade agreements like the USMCA. Already, discussions on re-evaluations of this agreement have surfaced, with nearly half of Canadians advocating for its review.
The potential knock-on effects from these tariff threats could be long-feared and wide-ranging, touching everything from consumer prices to job markets. Economic experts widely note how trade conflicts of such magnitude might alter competition levels and consumer habits, both within the U.S. and internationally.
With Trump’s promises of sweeping economic reform looming large, industry leaders and consumers alike are left trying to decode his intentions and navigate the shifting tides between national security and economic interests. Will diplomacy prevail, or are tariffs the new normal as we march toward Trump’s anticipated presidency? The coming months will undoubtedly determine how these threads will weave together, affecting trade relations across North America and beyond.