Trump threatens China, Mexico and Canada with new tariffs

Donald Trump says he will hit China, Mexico and Canada with new tariffs on day one of his presidency, in an effort to force them to crack down on illegal immigration and drug smuggling into the US.

The US president-elect said he would sign an executive order imposing a 25% tariff on all goods coming from Mexico and Canada, after being inaugurated on 20 January 2025.

He also said an additional 10% tariff would be levied on China until its government cracked down on fentanyl smuggling to the US.

If Trump follows through, it will mark a major escalation in tensions with the US's three top trading partners. It could also lead to higher prices for Americans, since tariffs work as a form of tax on imports.

The US is the world's largest importer. China, Mexico and Canada account for about 40% of the $3.2tn (£2.6tn) of goods it imports each year, according to official data.

China has defended its efforts to stop the flow of illegal drugs, and has warned that there can be no winner in a trade war between the two.

After Trump made his tariff threat, he discussed trade and border security with Canada's Prime Minister Justin Trudeau, according to a Canadian source who spoke to the Reuters news agency. They had a "good discussion", the source said.

Mexico's finance ministry said: "Mexico is the United States' top trade partner, and the USMCA provides a framework of certainty for national and international investors."

A tariff is a domestic tax levied on goods as they enter the country, proportional to the value of the import. So a car imported to the US with a value of $50,000 subject to a 25% tariff, would face a $12,500 charge.

Tariffs are a central part of Trump's economic vision - he sees them as a way of growing the US economy, protecting jobs and raising tax revenue.

He has previously claimed that these taxes are "not going to be a cost to you, it’s a cost to another country".

This is almost universally regarded by economists as misleading.

The charge is physically paid by the domestic company that imports the goods, not the foreign company that exports them.

So, in that sense, it is a straightforward tax paid by domestic US firms to the US government.

Trump imposed a number of tariffs in his first term of office, many of which have been kept in place by his successor, President Joe Biden. Economic studies suggest most of the economic burden was ultimately borne by US consumers.

North America correspondent Anthony Zurcher makes sense of the presidential election in his twice weekly US Election Unspun newsletter. Readers in the UK can sign up here. Those outside the UK can sign up here.