President-elect Donald Trump’s announcement of tariff plans sparked criticism Tuesday from Mexico, Canada and China and raised questions about whether the moves would violate international trade agreements — including one he renegotiated in his first term.
Trump posted on social media Monday that as “one of my many first Executive Orders” he would impose a 25 percent tariff on all imports from Mexico and Canada and a 10 percent additional tariff on China. He said the tariffs are in response to the ongoing fentanyl epidemic, crime and illegal immigration.
More than 90 percent of intercepted fentanyl trafficked by cartels is found at ports of entry, primarily in vehicles driven by U.S. citizens, according to Customs and Border Protection.
“As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before,” Trump posted. “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.
On China, Trump posted that he had many talks about fentanyl and other drugs being sent into the United States, “But to no avail.”
“Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through, and drugs are pouring into our Country, mostly through Mexico, at levels never seen before,” Trump posted.
Mexico is ranked as the top trading partner with the U.S., followed by Canada and then China, according to September U.S. Census Bureau data.
Mexican President Claudia Sheinbaum wrote a letter to Trump on his tariff announcement and read it at a press conference Tuesday. She said that Mexico has “developed a comprehensive policy” to address the flow of migrants into the U.S., citing CBP statistics that found crossings at the southwest border are down by 75 percent from last year.
Sheinbaum said that Mexico has seized different types of drugs and arrested people for charges related to drug trafficking but that drug consumption “is a problem of public health and consumption in your country’s society.”
She warned that the tariffs will harm the motor industry and would cause job losses and inflation in both the U.S. and Mexico.
“One tariff would be followed by another in response, and so on until we put at risk common businesses,” Sheinbaum said. She is planning on discussing the tariffs with Trump’s team.
Ontario Premier Doug Ford posted on social media that the tariffs would be “devastating to workers and jobs in both Canada and the U.S.” He called on Canada’s government to take the border situation seriously and said that Canadian Prime Minister Justin Trudeau must call the premiers for an “urgent meeting.”
Liu Pengyu, a spokesperson for the Chinese Embassy in the U.S., posted on social media that no one will win a trade or tariff war.
“China-US economic and trade cooperation is mutually beneficial in nature,” he wrote, adding that China has worked with the U.S. to address fentanyl trafficking from China.
Trade agreement violations
Trade experts warn that Trump’s 25 percent tariffs would violate the U.S.-Mexico-Canada Agreement, which the Trump administration negotiated during his first term, and cause trouble with the World Trade Organization.
The agreement replaced the North American Free Trade Agreement in 2020, and the Office of the U.S. Trade Representative says that the agreement is a “mutually beneficial win for North American workers, farmers, ranchers, and businesses.”
Mary E. Lovely, senior fellow at the Peterson Institute for International Economics, said that Trump’s proposal would violate the agreement which requires low to zero tariffs on most products. PIIE is a nonprofit, nonpartisan trade research organization.
“Tariffs are very low, obviously because of the USMCA, which President Trump himself renegotiated,” Lovely said. “So we know that tariffs of 25 percent would be very destabilizing to North American production networks, and in particular, to autos.”
National Foreign Trade Council President Jake Colvin also said that the tariffs would be a “clear violation of the USMCA.” NFTC advocates on issues related to international tax and trade, global supply chains and national security policies.
Colvin warned that the cost of tariffs can fall on business and consumers and noted the retaliation threat from Sheinbaum.
“While we’re all familiar with the President-elect’s fondness for tariffs as a negotiating tool, it’s particularly troubling that he’s threatening to aim them at America’s closest allies and trading partners on the very first day of his administration,” he said in a statement.
Sen. Charles E. Grassley, R-Iowa, said Tuesday in a conference call with Iowa reporters that the tariffs could be used as a negotiation tool, but said tariffs were tricky “because we in Iowa and throughout the agricultural community know that the first thing that’s retaliated against is agriculture.”
“I just think we need to get tariffs down,” Grassley said in the call, according to RadioIowa and other outlets. “And that doesn’t bad mouth, in no way is that meant to disagree with Trump because I think he’s using tariffs as a negotiating tool.”
Negotiation tool or not, the tariffs could also cause trouble with the World Trade Organization.
“Both Canada and Mexico are members of the WTO. They’re supposed to get most-favored-nation rates at a minimum,” Lovely said. “He’d be in violation of our treaty under the WTO.”
Most-favored-nation status is a tenet of the WTO that requires equal treatment among trading partners, meaning that if an advantage is offered to one country it must be extended across the board to others within the WTO, though there are some exceptions.
China is also a member of the WTO and has most-favored-nation status. If the tariffs are imposed, the three countries could file to resolve the trade dispute with the WTO but that path would likely go nowhere.
“There is an appellate body, which is supposed to take appeals, but the U.S. refuses to allow them to seat judges, so there isn’t a panel to hear the case,” Lovely said. If a case is lost, a member can appeal knowing the process won’t work, known as “appealing into the void.”
It’s unclear how Trump will impose the tariffs, but one avenue he could use is through the 1977 International Emergency Economic Powers law. The IEEPA grants the president control over economic transactions.
But the law has several restrictions and checks, according to the Congressional Research Service, including consulting with Congress before exercising the authority and immediately transmitting a report afterward and again every six months the authority is in place.
Congress can terminate the emergency through a privileged joint resolution, and it can be challenged through the judicial system, opening up Trump’s tariff plans to possible lawsuits.
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