Trump signals sweeping tariff plans ahead of inauguration

President-elect Donald Trump announced on Monday (local time) that one of his first executive orders upon taking office on Jan. 20 would impose a 25% tariff on all products entering the U.S. from Mexico and Canada. He also pledged an additional 10% tariff on all imports from China.

With 55 days remaining until his inauguration, Trump’s bold tariff proposals underscore his “America First” agenda, aimed at reshaping the global economy. The announcement immediately sent ripples through global financial markets, with major currencies weakening against the U.S. dollar and market volatility increasing—what analysts are calling the "Trump risk."

In a post on the social media platform, Truth Social, Trump justified the measures by stating, “Thousands of people entering through Mexico and Canada are spreading unprecedented levels of crime and drugs in the U.S.” He added, “We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price.” Trump emphasized that the tariffs would remain in effect until the influx of drugs, particularly fentanyl, and illegal immigration is halted.

The announcement signals Trump’s intent to enact the 25% tariff increase against neighboring allies on his first day in office, overturning longstanding trade policies. Mexico and Canada, which currently benefit from the U.S.-Mexico-Canada Agreement (USMCA) that eliminates tariffs, might face a dramatic shift in trade relations.

Mexico, China, and Canada rank as the U.S.'s three largest trading partners, in that order. By targeting these nations, Trump appears determined to disrupt the global trade system in favor of his protectionist vision. Analysts suggest that the proposed tariffs could complicate efforts by South Korean companies that recently invested in Mexico and other regions under President Joe Biden’s supply chain realignment strategy. The Trump administration could also leverage tariffs as a bargaining tool to push for concessions on trade surpluses and defense cost-sharing agreements.