Trump Threatens Tariffs on Mexico, Canada, and China
On his first day back in office, President Donald Trump made it clear that new tariffs are imminent. He stated his intention to impose a 25% duty on goods imported from Mexico and Canada, potentially taking effect on February 1st.
Trump also suggested that blanket tariffs remain on the table, citing unfair trade practices by various countries. Regarding China, he declined to provide specifics, but indicated that ongoing negotiations could influence tariff decisions, including the possibility of targeting social media app TikTok.
Trump's inaugural address emphasized his commitment to overhauling the trade system to protect American workers. He stated that instead of enriching other countries, he would "tariff and tax foreign countries to enrich our citizens."
Initial market reactions were mixed, with S&P 500 futures rising but the US dollar index spiking after Trump's evening comments. Experts believe that any delay in enacting tariffs was likely intended to prevent market volatility, but significant trade action is still expected.
Trump has previously promised to implement tariffs on Canada and Mexico from day one, but this did not occur. It remains unclear the exact legal framework he will use to impose tariffs, with potential options including the International Emergency Economic Powers Act, Section 301, and Section 232 tariffs.
Analysts predict that Trump's tariffs will likely lead to market volatility, a stronger US dollar, and higher US equities in the first year of his presidency. Trump has also proposed establishing an External Revenue Service to collect the revenue generated from increased tariffs.