When President Trump refrained from immediately imposing new tariffs on his first day in office, as he had previously threatened, business executives and others who support international trade breathed a sigh of relief.
That relief has been short-lived. On Monday night, just hours after his inauguration speech, Mr. Trump said he planned to put a 25 percent tariff on products from Canada and Mexico by Feb. 1, claiming the countries were allowing “mass numbers of people and fentanyl” to come to the United States.
On Tuesday evening, Mr. Trump expanded the threat and said he also intends to put an additional 10 percent tariff on Chinese products by the same date, saying China was sending fentanyl to Mexico and Canada.
The statements leave just 10 days before significant levies would go into effect on the United States’ three largest trading partners, a move that could throw both American diplomatic relationships and global supply chains into disarray. Mexico, China and Canada together account for more than a third of the goods and services that are imported and exported by the United States, supporting tens of millions of American jobs.
The three countries together purchased more than $1 trillion of U.S. exports and provided nearly $1.5 trillion of goods and services to the United States in 2023.
The economies of Mexico and Canada in particular are closely integrated with that of the United States. Supply chains for various goods snake back and forth across North American borders, traveling between fields, factories and stores in each country as they are transformed from raw materials into finished products.
A single car and its parts may cross the U.S.-Canada border eight times as it is assembled. A pair of bluejeans could be made with cotton, fabric and buttons from the United States, but sewn in a factory in Mexico. Farmers in the United States send corn and soybeans south of the border to be incorporated into packaged food and animal feed; Mexican farms send American groceries stores cheap avocados, mangos and tomatoes, even in the dead of winter.
If a 25 percent tariff is added each time that one of those products crosses the U.S. border, trade experts said, it could significantly raise the cost of goods Americans buy and even force U.S. manufacturers to shutter operations.
It’s not clear whether Mr. Trump will actually follow through on those threats, nor which products the tariffs would apply to if imposed. One person familiar with the Trump administration’s deliberations said they had been considering tariffs on all imports from those countries, as well as looking at tariffs on specific goods, like cars, steel and aluminum.
Stock markets have mostly shrugged off Mr. Trump’s tariff statements and closed yesterday near record highs.
The Canadian and Mexican governments in particular have rushed to try to avoid any tariffs. They have tried to reassure the Trump team that they are taking extra effort to stop people and drugs from crossing American borders, and have drawn up lists of American products on which they could impose their own tariffs in response.
The Chinese government has also been weighing its options for potential retaliation, should Mr. Trump impose tariffs. At a news briefing in Beijing on Wednesday, Mao Ning, a spokeswoman for China’s Foreign Ministry, said that China would “safeguard” its interests. “We always believe there is no winner in a tariff or trade war,” she added.
