Trump threatens Canada, Mexico with 25% tariffs, China another 10%

Trump said he would implement the tariffs with executive orders on his first day in office – Inauguration Day on Jan. 20.

The president-elect showed an affinity for the same round numbers in his first term. He imposed Section 232 “national security” tariffs of 25% on imported steel and 10% on imported aluminum in March 2018.

25% for Canada and Mexico

“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 said in a post on Truth Social. He said he would do so in response to migrants and crime “pouring through Mexico and Canada.”

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” the president-elect said.

Recall that Trump in 2018 imposed Section 232 tariffs of 25% on steel imported from US adversaries, such as Russia and China, as well as neighbors and allies, such as Canada and Mexico.

The tariffs on Canada and Mexico, two of the United States’ closest trading partners, were partly responsible for US hot-rolled (HR) coil prices surging to $915 per short ton (st) in July 2018, according to SMU’s pricing archives.

That gain was stunning at the time and marked the highest prices for HR since they overheated ahead of the financial crisis in 2008. Prices fell back to earth in 2019 after the tariff was removed from Canada and Mexico.

A tariff on all imports from Canada and Mexico, if implemented, could prove far more disruptive to closely linked North American supply chains – especially in sectors such as auto manufacturing.

10% for China

Trump also cited drugs as the reason for the proposed new 10% tariff on all imports from China.

“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,” he wrote on Truth Social.

“Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump said.

Section 232 had little impact on steel imported from China. That’s because steel from China already faced an array of prohibitively high anti-dumping (AD) and countervailing (CVD) orders. Additional tariffs on downstream goods, however, could prove more disruptive.