U.S. President-elect Donald Trump said yesterday in a post on Truth Social that he will impose a 25 percent tariff on all goods entering the U.S. from Canada and Mexico on his first day in office until they stop drugs and migrants from crossing over their borders with the United States. In a separate post, he also threatened an additional 10 percent tariff on all products from China. (New York Times)
Our Take
Trump’s iconoclastic embrace of tariffs on imports from U.S. trade partners is at this point well known, as is the fact that he often uses the threat of exaggerated tariffs to gain concessions from those partners. He used the tactic a number of times during his first term, most notably to convince Canada and Mexico to renegotiate the North American Free Trade Agreement, or NAFTA, ultimately replacing it with the U.S.-Mexico-Canada Agreement, or USMCA.
The fact that Trump often used tariffs as a coercive threat in the past, however, does not mean trade partners can take it for granted that he won’t follow through. During his first term, he did so on multiple occasions, most notably as a tool in the U.S. strategic competition with China. But U.S. allies were not spared, either, with levies on steel and aluminum in particular affecting Mexico, Canada, South Korea, Japan, the EU and other close partners.