It will be a day-one priority when he takes office on January 20, 2025, in a move to curb the exports of drugs like fentanyl and illegal immigrants from Canada and Mexico into the United States.
This means that every good- for example, automotive parts, oil and gas, computer and electrical equipment coming in from Canada and Mexico will cost 25% more, while electronics, computers, toys and sporting goods from China will cost 10% more.
Although some costs would be absorbed by the exporter, most would still have to be absorbed by the consumer.
Canada being one of the United States’ largest trading partners, will lead to economic disruptions in major industries. The energy industry, particularly oil and gas exports to the US, is valued at approximately $177.19 billion as of 2023 and faces significant risks.
The tariff would be seen as a potential trade disruptor, which could affect investor confidence and economic stability. The uncertainty could result in investors moving their assets to safer currencies or investments, leading to a drop in the currency’s value in question, in this case, weakening the Canadian dollar.
For Mexico, the vehicle and car parts exports worth $130.9 billion also face risks, with the Mexican peso weakening.
Mexico has since threatened to impose retaliatory tariffs on the United States for every tariff imposed on the country, potentially leading to a trade war.
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