Trump announces 25% tariff on imports from Canada and Mexico and additional tariffs on China

President-elect Donald Trump plans to use an executive order to impose a 25% tariff on imports from Canada and Mexico on his first day in office. The threats include an additional 10% tariff on goods from China. The announcements are in response to Trump’s election promises. The aggressive tariffs are aimed at enticing companies to set up production facilities in the U.S. Biden ended tariff increases on some Chinese-made products in September.

Trump continually said on the campaign trail that he would raise tariffs on Chinese-made goods to 60%, in addition to implementing a tariff of up to 20% on imports across the board.

Everything points to a trade war, similar to the one that took place during the Republican politician’s first presidency, when the president imposed tariffs on products from several countries, including Canada, Mexico and China.

Also at stake is the Treaty between Mexico, the United States and Canada (T-MEC) when Trump returns to office. The 2018 trade agreement ended tensions between the North American countries, but will be reviewed in 2026.

Tariffs will increase inflation and cost U.S. shoppers as much as $78 billion in purchasing power each year, according to the National Retail Federation. Tariff increases would also be “devastating” for manufacturers that import foreign components, according to Sanjay Patnaik, a senior fellow at the Brookings Institution.

This levy may push companies to create independent supply chains to export to the United States, according to Mary Lovely, senior research fellow at the Peterson Institute for International Economics.