New Delhi: US President Donald Trump has said that 25 percent tariffs could be imposed on Canada and Mexico starting 1 February over the influx of illegal immigrants and narcotics from the countries into the United States.
Trump made the announcement while signing executive orders in the Oval Office, hours after his inauguration.
Throughout his presidential campaign, Trump had repeatedly threatened tariffs on America’s neighbours, China and even European Union allies.
While he stopped short of announcing any day-one tariffs, he explicitly called out Canada and Mexico as the two nations that he was mulling imposing tariffs over.
In October 2024, Reuters had reported that Trump had said that he would impose tariffs as high as 200 percent on vehicles assembled and imported from Mexico. To get foreign companies to manufacture in the US, Trump had also said he would impose tariffs on cars from Germany.
Additionally, he had advocated for a baseline tariff of 10 to 20 percent on all imports and a 60 percent tariff on Chinese goods, according to Reuters.
While no definitive plans have been announced to impose these tariffs, the White House announced the America First Trade Policy on 20 January, directing the commerce and treasury departments, and the US Trade Representative to investigate the “annual trade deficit in goods” and recommend actions, such as “global supplemental tariff or other policies”.
Unlawful migration from Canada, Mexico, China and other countries, which may include India, was also highlighted in the policy. It also called for a review of the US’ trade agreement with China and recommendations in terms of actions—including the imposition of tariffs—based on the findings.
The policy called for the establishment of an External Revenue Service (ERS) to “collect tariffs, duties, and other foreign trade-related revenues”.
“I will immediately begin the overhaul of our trade system to protect American workers and families. Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Trump said in his inauguration speech. “For this purpose, we are establishing the external revenue service to collect all tariffs, duties, and revenues.”
The establishment of ERS follows Trump’s threat of imposing a 100 percent tariff on BRICS countries, if the group were to either create a new currency or back any other currency over the US dollar. The BRICS nations include Brazil, Russia, India, China and South Africa.
India’s bilateral trade with the US reached nearly $120 billion in FY24, making the US India’s largest trade partner.
Trump’s tariff threats have drawn swift responses. Canadian Finance Minister Dominic LeBlanc told reporters, “The one thing we’ve learned is that President Trump—at moments—can be unpredictable.”
Mexican President Claudia Sheinbaum Pardo said, “The response to one tariff will be another, until we put at risk companies that we share.”
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Canada and Mexico have always used and abused the lenient attitude of US towards trade issues. Trump must turn on the heat and make them realise that unfair trade practices are just not acceptable.
Both Canada and Mexico must be hit with 50% tariffs.