President-elect Donald Trump on Monday threatened to unilaterally impose a massive consumption tax on Americans who purchase imported goods from three of the country’s top trading partners on the day he takes office, seemingly with no regard for the inflationary effects of such a move.
In a series of posts on his Truth Social platform, Trump said he would hike the cost of Mexican and Canadian products by 25 percent by executive order if both countries did not take steps to curb what he described as unacceptable flows of drugs and migrants into the U.S. across their respective borders.
“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders,” he wrote.
The president-elect’s social media post indicated that he believes — incorrectly — that foreign governments pay tariffs for the privilege of engaging in cross-border trade with the U.S. But tariffs are actually import taxes that are paid by American companies that import foreign goods. Those companies pass the costs on to American consumers in the form of higher prices.
The Trump-Vance transition team did not immediately respond to a query from The Independent on whether Trump understands that Americans — not foreign governments — ultimately pay the tariffs charged on imported goods.
Continuing, Trump said the higher import taxes would “remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” he added.
Separately, he threatened to raise the cost of all imported products of Chinese origin by 10 percent with another unilateral import tax hike. He claimed this action would be taken in retaliation for China’s alleged failure to keep promises to impose the death penalty on drug traffickers.
“Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump wrote in another post. “Thank you for your attention to this matter.”
If implemented, the tariffs would have a massive impact on the U.S. economy and global trade, and would likely upend the U.S.-Mexico-Canada Agreement that Trump helped negotiate to replace NAFTA in his first term.
In 2022, cross-border trade between Canada, Mexico and the U.S. amounted to an estimated $1.8 trillion, according to the U.S. Trade Representative’s office. Mexico is also a key partner of the U.S. auto industry.
Canada’s exports to the United States were worth US$439.6bn during 2023, according to the United Nations COMTRADE database on international trade.
Meanwhile, Mexico’s exports to the United States were US$452.29bn during 2022, according to the United Nations COMTRADE database.
Such tariffs likely wouldn’t stem the flow of illegal drugs into the U.S. Most fentanyl that enters the U.S. is brought in by U.S. citizens at legal ports of entry.
Allies celebrated the proposal.
“To be clear, according to Trump the 25% tariffs will not be implemented, or if implemented will be removed, once Mexico and Canada stop the flow of illegal immigrants and fentanyl into the U.S.,” investor Bill Ackman wrote on X after the announcement. “In other words, @realDonaldTrump is going to use tariffs as a weapon to achieve economic and political outcomes which are in the best interest of America, fulfilling his America first policy.”
The Independent has contacted the U.S. embassies of Canada, Mexico, and China for comment.