Trump plans tariffs on Canada, Mexico, China: What does it mean?

Experts believe that the new tariffs can have serious implications not only for the US but also for global supply chains and companies that do business with some of the world’s largest economies.

How high can Trump’s tariffs get?

Trump announced that he would sign an executive order imposing a 25% tariff on all Mexican and Canadian imports and an “additional” 10% tariff on Chinese goods on the first day of his administration.

However, it remains unclear if these proposed tariffs would be in addition to tariffs that Trump talked about during his campaign trail — Trump had said he would impose tariffs of 60% or more on imports of Chinese goods and suggested he would enforce a tariff of 1,000% or higher on vehicles imported from Mexico.

Why does Trump want to impose these tariffs?

In his posts on Truth Social on Monday (November 25), Trump said, the tariffs will stay in place for Mexican and Canadian goods until the “invasion” of drugs and undocumented migrants comes to an end.

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” the president-elect wrote.

“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” he added. “We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”

Trump also accused China of shipping illegal drugs to the US. “Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through”, he said.

According to some Trump allies, the president-elect hopes to use the threat of tariffs as a bargaining chip in future negotiations with foreign countries, Al Jazeera reported.

What can be the implication?

In the short term, the tariffs would make it expensive for companies in Canada, Mexico, and China to export goods to the US. Experts suggest that these companies would pass on the extra costs to customers, which would result in higher prices.

Mexico’s auto industry could be severely affected as it is home to manufacturing plants for Honda, Nissan, Toyota, Mazda and Kia, as well as several Chinese auto part suppliers, according to the Al Jazeera report. Tech companies such as Foxconn, Nvidia, and Lenovo which have server facilities and factories in Mexico would also be hit.

“Canadian media reported that even a 10% tariff could result in $21 billion (Canadian $30 billion) a year in economic costs,” the report said.

In the long term, American industries which ship parts, materials and finished goods across US borders can also be impacted.

“The costs could be particularly high for the industries that depend on the tightly integrated North American market, which has been knit together by a free-trade agreement for over three decades… It could also invite retaliation from other governments, which could put their own levies on American exports,” according to a report by The New York Times.

This could, in turn, lead to a rise in prices in the US and other parts of the world.