President-elect Donald Trump said late Monday that he will impose big tariffs on goods coming from China, Canada and Mexico on the first day he takes office, citing fentanyl shipments and illegal immigration.
That includes a 10% additional tariff on Chinese goods and 25% tariffs on products coming from Canada and Mexico.
Saying drugs are "pouring into our Country, Trump posted on his Truth Social site that "we will be charging China an additional 10% Tariff ... on all of their many products.
In another Truth Social post, Trump, wrote, "On January 20th, as one of my many first Executive Orders, 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."
Trump added that the tariff "will remain in effect until such time" that drugs, especially fentanyl, and all illegal aliens into the U.S. have been halted.
Unilateral Trump tariffs on Mexico and Canada would undercut the United States-Mexico-Canada Agreement (USMCA), the Trump-negotiated replacement to NAFTA. But the USMCA has no real binding commitments, and allows any country to ignore the rules based on "essential security" claims that are not subject to any review.
Trump Tariff Threat's Market Impact?
Markets cheered Donald Trump's election in large part on hopes that he'll deliver tax cuts and deregulation, while betting that tariff hikes may come later and not as strong as he threatened during the campaign.
On Monday, markets rallied on Trump's Treasury Secretary pick, hedge fund chief Scott Bessent. Bessent was seen as a Wall Street-friendly choice, with goals of promoting growth and reining in the deficit. While he has signaled support for tariffs, Bessent was seen as someone who might encourage Trump to implement tariff hikes gradually, taking economic concerns into account.
The Dow Jones, S&P 500 and Russell 2000 all hit record highs on Monday.
Dow Jones futures fell modestly early Tuesday due to bad news for Amgen. But S&P 500 futures rose slightly following the Trump tariff news.
Markets may be hoping the new Trump tariff threat is temporary or a negotiating tactic. But it may be more than that.
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