Incoming U.S. President Threatens To Impose Tariffs On Mexico And Canada
Prior to the Thanksgiving holiday in the United States, President-elect Donald Trump took to social media to propose a 25 percent duty on imports of all products from Canada and Mexico unless those two countries address the incoming commander in chief’s concerns about the flow of migrants and narcotics across the border.
Please note: the Metals Service Center Institute (MSCI) has not taken a position on this proposal and, in the past, has argued against penalties on the United States’ North American trading partners. (Visit this link to learn more about the institute’s past comments on trade matters.)
According to Politico, two people familiar with the plan said the president-elect would not exempt crude oil shipments from any new tariffs on Canada or Mexico.
Statistics Canada data from 2023 shows that approximately 77 percent of all Canadian exports end up in the United States. China receives about four percent of Canadian goods while Japan comes in third at 2.1 percent. Given the importance of U.S.-Canadian trade, Canadian leaders already have responded to the threat. As Bloomberg reported, Canada’s Public Safety Minister Dominic LeBlanc said his government would respond to Trump’s tariff threat by stepping up border enforcement in a “visible and muscular way.”
Prime Minister Justin Trudeau also traveled to Florida to meet with the president-elect. According to Politico, a senior Canadian government official described the encounter as “very friendly, very positive” and noted that, along with trade and border security, the two discussed pipelines, defense spending, and the G7.
As CBS News reported, Canadian officials also are contemplating penalties of their own.
Mexican President Claudia Sheinbaum warned imposing tariffs on all exports from Mexico would have dire consequences for both countries and suggested her government would retaliate with tariffs of its own if President-elect Trump moves forward with his plans. Separately, and prior to President-elect Trump’s announcement, President Sheinbaum said her government has “a plan with the aim of substituting these imports that come from China, and producing the majority of them in Mexico, either with Mexican companies or primarily North American companies.” Read more at this link.
Some U.S. officials doubted the penalties on Canada and Mexico will ever become reality. Sen. Chuck Grassley (R-Iowa) told Politico that President-elect Trump’s announcement is a mere “negotiating tool,” for example.
Still, the proposal to place tariffs on Canadian and Mexican products was not the only policy President-elect Trump issued over the holiday. Two days after Thanksgiving, he threatened to impose 100 percent tariffs on developing economies, including Brazil, Russia, India, China, and South Africa, unless the governments of these countries commit to using the U.S. dollar as their reserve currency.