Donald Trump plans to use an executive order to impose a 25% tariff on imports from Canada and Mexico on his first day in office, the president-elect posted Monday on Truth Social.
These new threats also include an additional 10% tariff on goods from China and build on Trump’s campaign promises to impose aggressive tariffs to entice companies to establish manufacturing centers in the United States. The Biden administration finalized tariff increases on some Chinese-made goods in September.
Ahead of the Nov. 5 election, Trump has consistently said he would raise tariffs on Chinese-made goods to 60%, while implementing tariffs of up to 20% on imports overall.
The moves could put the country back on the path of the trade war waged during Trump’s first presidency, when the president imposed tariffs on goods from multiple countries, including Canada, Mexico and China.
Also at stake, with Trump’s return to office, is the United States-Mexico-Canada agreement. The 2018 trade deal put an end to tensions between North American countries, but the agreement is due to be reviewed in 2026.
“If President Trump proceeds to impose immediate and unilateral tariffs, it could increase tensions and effectively ‘go nuclear’ on the USMCA,” Alberto Villareal, managing director of business consultancy Nepanoa, wrote in a Monday post on LinkedIn. “In response, Mexico and Canada may retaliate with tariffs on U.S. exports before revisiting the agreement.”
According to Villareal, retaliatory tariffs from Mexico and Canada would impact goods such as agricultural products and chemicals.
Raising tariffs could also hurt U.S. retailers, manufacturers and consumers.
Even before Trump’s announcement on Monday, the new tariffs were expected to raise inflation and cost American shoppers up to $78 billion in spending power each year, according to the National Retail Federation. According to Sanjay Patnaik, a senior fellow at the Brookings Institution, the tariff increases would also be “devastating” for manufacturers who import foreign components.
Additionally, tariffs could push companies to set up autonomous supply chains to export to the United States, Mary Lovely, Anthony M. Solomon senior fellow at the Peterson Institute for International Economics, said during a Nov. 20 news conference with the port of Los Angeles.
With less than two months until Trump takes office again, companies are already preparing for increased tariffs. Some, like Williams-Sonoma, Steve Madden and Ralph Lauren, are proactively reducing their sourcing from China, while others like Honda and Traeger are changing their manufacturing strategies.
Correction: This article has been updated to reflect the Nov. 5 election and to add additional context on how the news is based on existing tariff rates.