Trump Threatened Higher Tariffs on Three Countries, Including China

 

On November 25, US President-elect Donald Trump threatened sweeping new tariffs targeting Mexico, Canada, and China, aiming to curb illegal immigration and drug trafficking. He announced plans for a 25% tariff on all imports from Canada and Mexico and a 10% more tariff on Chinese imports when he takes office on Jan. 20.

 

Trump's rhetoric, shared on Truth Social, emphasized that he would consider the increased taxes on Canada, Mexico, and China as the first enforcement orders. He implied that the tax raise was to combat crime and drug trade along the U.S. border. Critics argue that these tariffs, if implemented, could significantly raise prices of universal needs in the U.S., given that Mexico, China, and Canada are the U.S.'s top three suppliers of goods.

 

 

 

Simultaneously, China, the U.S.’s largest supplier, replied to Trump's updated tariff order by warning of mutual losses from the US-China trade war. Chinese Embassy spokesperson Liu Pengyu emphasized the mutual benefits of U.S.-China trade, cautioning that Trump's threat to raise taxes would only trigger a war they both would lose. He also added that China has been helping the U.S. fight drug trafficking.

 

It is unclear whether Trump will implement those threats. Trump's nominee for Treasury Secretary, Scott Bessent who may be responsible for imposing tariffs on other countries, has repeatedly expressed the view that tariffs are a negotiating tool. He wrote on Fox News that tariffs were a useful tool for the president to achieve his foreign policy goals. Tariffs can play a central role in the U.S.'s bargain with other countries about military, foreign trade, and politics. So, Trump may use such tariff increases on three countries, including China as a diplomatic negotiating tactic.

 

But if Trump imposes the new tariff on the three countries, the prices of goods in the U.S., including food and automobiles, will increase, pushing up inflation. As a result, the Fed may need to raise the rate.