President Donald Trump plans to hit Mexico and Canada with tariffs of as much as 25% as soon as Feb. 1, saying that the countries haven’t met the criteria he laid out for them to avoid him making good on his threats.
“We’re thinking in terms of 25% on Mexico and Canada, because they’re allowing vast numbers of people” across the border, along with fentanyl, Trump said Monday night in response to questions from reporters in the Oval Office.
Trump had made tariffs a cornerstone of his economic policy, often pointing to more than a century earlier when the U.S. relied on tariffs to raise revenue. In the past, he’s even floated replacing the federal income tax with tariffs, although that idea has taken a backseat.
In late November, Trump threatened to slap “ALL products” imported from Mexico and Canada with tariffs of 25% until the flow of illegal drugs, such as fentanyl, and undocumented immigrants into the U.S. was stopped. That set off a slew of public and private comments and meetings between Trump and the leaders of Canada and Mexico.
Both countries have threatened retaliatory tariffs.
Read more: Trump isn’t backing down from his tariff tough talk: ‘We have to take it seriously’
Tariffs on imports from the U.S.’s biggest trade partners would be bad for U.S. energy imports and auto supply chains. In 2023, the U.S. imported $475 billion worth of goods from Mexico and $418 billion from Canada, according to the U.S. Census Bureau.
The U.S.-Mexico-Canada Agreement, which Trump negotiated in his first term, is up for review next year. He signed an executive action on Monday after his inauguration directing officials to investigate America’s trade deficits, to develop an “External Revenue Service” to collect tariffs, and to review existing trade agreements.
The president has also threatened universal tariffs of between 10% and 20% on all imports, although Trump said on Monday that “we’re not ready for that just yet.” Besides Mexico and Canada, Trump has threatened to slap new tariffs on goods from China, the European Union, and the countries in the BRICS geopolitical coalition. He also refused to rule out implementing tariffs to help the U.S. buy Greenland from Denmark, make Canada part of the U.S., and acquire the Panama Canal.
“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Trump said in his inaugural address Monday afternoon. “It will be massive amounts of money pouring into our treasury coming from foreign sources,” he said of the tariffs.
Tariffs would raise the prices of imported goods, such as food and clothing. Since most companies wouldn’t absorb much of the higher costs, consumers would likely have to pay higher prices for many imported products. According to one analysis of his campaign tax plans, consumers could lose as much as $78 billion in annual spending power.