Donald Trump has just said: 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 US

President-elect Donald Trump announced plans on Monday to impose steep tariffs on the United States' top three trading partners—Canada, Mexico, and China—signaling his intent to follow through on campaign promises that could lead to significant trade disputes.

Trump, set to take office on January 20, 2025, pledged a 25% tariff on all imports from Canada and Mexico until they take stronger action to curb drug trafficking, particularly fentanyl, and reduce migrant crossings into the U.S. This measure would likely conflict with the U.S.-Mexico-Canada Agreement (USMCA), which guarantees largely duty-free trade among the three nations.

Additionally, Trump proposed an “extra 10% tariff” on imports from China, further detailing his “America First” economic strategy. These tariffs mark some of his most concrete policy outlines since his election victory on November 5.

Tariff Threats and Trade Disputes

In a post on Truth Social, Trump declared, “On January 20th, I will sign all necessary documents to impose a 25% tariff on ALL products from Mexico and Canada, targeting their open borders and the ridiculous drug flows into our country.”

While the Biden administration had seen record migrant arrests during its tenure, crossings dropped sharply in 2024 following new border policies and enhanced enforcement by Mexico. Still, more than 83% of Mexico’s exports and 75% of Canada’s exports depend on the U.S. market.

The tariffs could also disrupt global supply chains, particularly for Asian auto and electronics manufacturers that rely on Mexico as a low-cost production base for U.S.-bound goods.

Trump’s threats to Canada and Mexico directly contradict the USMCA, a trade pact he himself signed into law in 2020. The agreement is set for potential renegotiation in 2026 under a "sunset" clause that allows for modifications or withdrawal.

Diplomatic and Market Responses

Following his announcement, Trump reportedly spoke with Canadian Prime Minister Justin Trudeau to discuss trade and border security. A Canadian official described the exchange as “constructive” and said the leaders would remain in contact.

Some analysts believe Trump’s tariff threats are intended to force early renegotiation of the USMCA. William Reinsch, former president of the National Foreign Trade Council, commented, “This feels more like a leverage play. The idea might be to pressure them into submission by keeping the threats coming.”

Mexico’s congressional leader Ricardo Monreal criticized the tariff proposal, urging dialogue to address shared challenges such as drug trafficking and border security. “Escalating trade retaliation only hurts ordinary people and doesn’t solve root problems,” he wrote on X, formerly Twitter.

Economic and Market Reactions

Trump’s announcement triggered swift reactions in financial markets. The U.S. dollar surged by 1% against the Canadian dollar and 2% against the Mexican peso. Asian stock markets, European equity futures, and S&P 500 futures all declined, with the latter dropping 0.3%.

If implemented, Trump’s tariff policies could reshape North American trade relations while heightening tensions with China, raising concerns about the broader impact on the global economy.