President-elect Donald Trump vowed to impose significant tariffs on the US's top trading partners – Canada, Mexico, and China. He plans to implement campaign promises that may lead to trade conflicts. Trump, set to assume office on Jan. 20, 2025, announced a 25 per cent tariff on imports from Canada and Mexico until they address drug and migrant issues at the border, potentially breaching free-trade agreements. Trump plans to impose a 10 per cent tariff on imports from China, as part of his economic agenda focused on prioritizing America's interests. "On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25 per cent Tariff on ALL products coming into the United States, and its ridiculous Open Borders," he said in a post on Truth Social. Migrant arrests hit a record high under President Joe Biden, straining US border enforcement. However, illegal crossings have significantly decreased this year due to new border restrictions implemented by Biden and increased enforcement by Mexico. In 2023, over 83 per cent of Mexico's exports went to the US, while 75 per cent of Canadian exports also went to the US. The tariffs could pose challenges for foreign companies, particularly Asian auto and electronics manufacturers that rely on Mexico as a cost-effective production hub for the US market. Trump's proposed new tariff may violate the terms of the US-Mexico-Canada Agreement on trade, which he signed into law in 2020. The agreement allows for mostly duty-free trade between the three countries. During the negotiations for USMCA, Canada and the United States imposed sanctions on each other's products. Trump will have the chance to renegotiate the agreement in 2026, when a "sunset" provision will require either withdrawal or discussions for changes to the pact. After threatening tariffs, Trump spoke with Canada's Prime Minister Trudeau about trade and border security. They had a positive discussion and plan to keep in touch, according to a Canadian source familiar with the matter. Trump may be using tariffs to push for a USMCA renegotiation, according to William Reinsch. Mexico's lower house leader Ricardo Monrea called for bilateral efforts to combat trafficking instead of escalating trade retaliation. Trump's announcement led to a dollar rally, with the dollar gaining against the Canadian dollar and Mexican peso. Asian markets fell, as did European equity futures, while S&P 500 futures dropped 0.3 per cent. Attribution: Reuters Subediting: M. S. Salama
