President-elect Donald Trump has threatened tariffs against Mexico and Canada if they do not stop drugs and illegal immigrants from entering the United States, an action that could affect several items imported from those countries.
Trump issued the threat Monday evening on Truth Social, announcing that if the two countries do not fix those problems to his liking, he will issue a 25% tariff on all products coming in from those countries.
“I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!” Trump posted.
During his first term, Trump used the threat of tariffs as a bargaining chip with several countries, including China. With his return to Washington months away, he’s laid the groundwork to use his authority to influence trade deals once again.
Here are some of the items imported from Canada and Mexico that could be affected.
Canada
Canada is the U.S.’s second-largest trade partner, including being its largest export partner and third-largest import partner. Canada accounts for 12.8% of imports into the U.S., according to the Census Bureau.
In 2022, the most recent year that has data available, the U.S. imported $481.2 billion worth of goods from Canada, including crude petroleum, cars, and petroleum gas, according to the Observatory of Economic Complexity. Machinery, materials such as plastics, aluminum, and wood, along with agriculture, among other products, are also major exports from Canada to the U.S., according to Trading Economics.
Tariffs on these products would likely affect the prices of a wide range of items that use these materials and could also affect fuel prices.
One of the primary drivers behind Trump’s victory over Vice President Kamala Harris earlier this month was a general sense of dissatisfaction with the economy. In particular, voters feel an overwhelming sense that their cost of living is going up and there is little anyone can do to ease their pain.
The cost of housing is particularly painful for families. Though interest rates are beginning to fall, there is still a dearth of new housing, keeping the supply down and costs high.
Canada exports roughly $8 billion in softwood lumber every year, with the U.S. being the single largest purchaser. Cranking up costs for lumber could keep housing starts low, undercutting one of Trump’s primary promises to voters to make their lives more affordable.
Mexico
South of the border is the U.S.’s top trading partner, including for imports and exports, according to the Census Bureau.
In 2022, the U.S. imported $493.1 billion worth of goods from Mexico, primarily in the form of cars, car parts, and computers, according to the Observatory of Economic Complexity.
Other major exports include electronic equipment, agriculture, and materials such as plastic, aluminum, rubbers, and glass, among other products, according to Trading Economics.
The southern border between the U.S. and Mexico was at the center of Trump’s pitch for another four years in the White House. His focus in his first term on building a wall to keep illegal immigrants out of the country has been largely replaced by a broader promise to crack down on illegal border crossings and a promise to deport anyone who enters illegally.
U.S. trade with Mexico has gone up across the board since Trump’s first term.
While the countries’ trade-in vehicles and auto parts was always robust, it has soared since 2017, with the U.S. importing $30.43 billion in vehicles in 2017 and $44.76 billion in 2023. Similarly, the U.S. imported roughly $22.6 billion in auto parts in 2017 and $34.3 billion last year.
The U.S. has also nearly doubled its imports of petroleum oil, tractors, and medical instruments from its southern neighbor in that time.
Trump’s introduction of steep tariffs on China in 2018 flipped the script on the country’s trade relationships. China nosedived from making up more than 21% of U.S. imports in 2018 to only slightly outpacing Canada in 2023 when it made up 13.86%. Last year, Mexico made up 15.43% of the U.S.’s imports.
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Mexican President Claudia Sheinbaum hinted Tuesday at retaliatory tariffs if Trump follows through with his threat for 25% tariffs on all imports into the U.S. from Mexico.
Trump takes office on Jan. 20, 2025, and said the tariffs would be one of his first executive orders after being sworn in, which could start his administration with a trade war.