President-Elect Trump Begins His Tariff Agenda
The Gist
On Monday, President-Elect Trump stated on Truth Social that on January 20th, he will begin the necessary process to impose 25% tariffs on all Mexican and Canadian imports into the US. Furthermore, he would implement an additional 10% tariff on China. According to his post, these tariffs will remain in effect until Canada and Mexico address the flow of drugs and immigrants through their borders. The expectation for China is to curb the export of fentanyl and other drugs.
On Saturday, he demanded a commitment from BRICS* countries to not create or back any currency with the intention of replacing the dollar. Otherwise, those countries would face 100% tariffs.
The Color
According to the Census Bureau, the US imported $3.83bn worth of goods and services in 2023, of which $3.11bn were goods. Mexico, China, and Canada were the US’s three largest sources of imports in 2023, according to Statista. Mexico claimed 15% of total goods imports, with China and Canada representing 14% each. India is the only other affected country within the US’s top ten trading partners at number nine, with 3% of total imports of goods.
President-Elect Trump got a response from his counterparts in Mexico and Canada as President Sheinbaum of Mexico and Prime Minister Trudeau of Canada had phone conversations with Trump after his statement. Furthermore, Prime Minister Trudeau traveled to Mar-a-Lago to meet face-to-face with the President-Elect.
The Takeaways
This week provided some clarity about the incoming Trump administration’s tariff policy, and it seems that tariffs will be used mainly as a negotiating tactic; however, some questions remain. During the electoral campaign, Trump explained that tariffs would help offset the cost of extending or increasing his 2017 tax cuts in 2025 and delivering on spending promises. If tariffs are not implemented or implemented in full, the administration will have to find other sources of income or savings, and that is where the Department of Government Efficiency (DOGE) would have to deliver on shrinking the government.
*BRICS countries include Brazil, Russia, India, China, India, and South Africa. Other countries have been invited to join BRICS but have either not yet committed or declined.