Donald Trump risked a trade war before taking the oath of office. The newly elected president has announced massive tariffs on Canada, Mexico and China. He has promised to implement these measures from the first day. British news agency Reuters reported this.
On Monday (November 25), Trump said a 25 percent tariff would be imposed on all goods coming from Mexico and Canada. His decision will remain in place until action is taken to curb drug trafficking and illegal immigration.
His move, if implemented, could violate the terms of the United States-Mexico-Canada Agreement (USMCA), which comes into effect in 2020. Under the US-Mexico-Canada agreement, most goods trade between the three countries are tariff-free. However, in 2026, there is an opportunity to renegotiate it under the 'sunset' clause of the agreement.
According to a 2023 estimate, 83 percent of Mexico's and 75 percent of Canada's exports go to the United States. The tariffs could also affect low-cost Asian cars and electronics manufactured in Mexico.
In addition to additional tariffs on Chinese goods, Trump has also announced a new 10 percent tariff. He said on his own social media, Truth Social, that the first executive order on January 20 will sign all necessary documents to impose a 25 percent tariff on all products from Mexico and Canada.
After the announcement, Trump had a phone conversation with Canadian Prime Minister Justin Trudeau. A Canadian source said trade and border security came up in their discussions.
Analyst William Reinsch says it's a veiled threat. This may have been done to ensure advance discussion of the USMCA.
Ricardo Monreal, the leader of Mexico's lower house, warned of the tariffs, saying such retaliatory measures would harm ordinary people and not solve the underlying problem.
Trump's announcement has already had an impact on the international financial markets. The Canadian dollar lost 1 percent and the Mexican peso 2 percent against the US dollar. Asian stock markets and European futures markets also fell.
According to experts, the Trump administration is trying to take a strong trade position with this announcement. However, if it is implemented, it may worsen relations with other countries as well as increasing the complexity of international trade.
