Trump Declares War: 25% Tariff on China, Canada, and Mexico by 2025

The possible future approach of President-elect Donald Trump will impose high tariffs on Canada, Mexico, and China when he assumes the office. He intends to levy tariffs of 25% on goods from Canada and Mexico and will scrap the open border policy the moment he takes office on 20 January 2025. As a cherry on top, he's also suggested putting an additional 10 percent tariff on goods from the PRC. In short, environmental problems essentially must rank among the prime issues on his agenda.

The spokesman for the Chinese embassy in the United States, Liu Pengyu, stated cooperation in China's and the US' economic and trade issues is mutually beneficial. No trade war or tariff war would benefit either side. He stated the anti-drug departments of China and the United States resumed communication and acknowledged that China had answered the anti-drug inquiries made by the United States. President Trump has advocated in the past for the revocation of China's most favored nation status (MFN-R) and proposed some 60% tariffs on imports from China during the campaign.

Mexico and Canada are heavily dependent on the US market, and such tariffs could have significant side effects on overseas companies using Mexico as a production base. Trump's tariff arrangement contradicts the folded United States-Mexico-Canada Agreement (USMCA), which freezes tariffs on most trade between three member states. Mr. Trump had planned to impose flat tariffs of about 10-20% on imports, with specific tariffs of anything up to 200% on cars coming in at the US-Mexico border.

Mexico's Ministry of Finance responded to Trump's tariffs by insisting that USMCA provides a framework of certainty for investors. Economists have warned that Trump's tariff proposal could return some imports to 1930s levels, leading to inflation; a collapse in trade between China and the US; and reprisals from a variety of sanctions that could completely alter supply chains. The burden of tariffs ultimately is borne by consumers or companies and manifests itself either as higher prices or lower profit margins.

Reinsch, a senior adviser with the Center for Strategic and International Studies, views Trump's threat of tariffs as typical of the "threat first, talk later" strategy. He expressed that he expected for some tariff measures against China because that would be legally and politically relatively easy to do.