On Tuesday, officials from China, Mexico, and Canada expressed their disapproval of President-elect Donald Trump’s announcement on social media about potential new tariffs on these nations right after taking office.

Trump stated that these tariffs are intended to combat drug trafficking, particularly fentanyl, and illegal immigration into the U.S. This proposed move seems to contradict the free-trade agreement he signed in 2020.

He mentioned he would sign an executive order on his first day, implementing a 25% tariff on products from Mexico and Canada, along with a 10% tariff on items imported from China.

Trump is set to assume the presidency on January 20, 2025.

In a post on his Truth Social platform, Trump remarked, “Mexico and Canada can easily address this longstanding issue. It’s time for them to face significant consequences!” He accused China separately of not stopping the flow of fentanyl to the U.S.

Trump’s statements were met with swift reactions from officials in all three countries.

Liu Pengyu, representing the Chinese embassy in Washington, asserted that “A trade war or tariff conflict benefits no one,” adding that the notion that China is purposefully allowing fentanyl precursors into the U.S. is entirely untrue.

Mexico’s finance ministry commented that the U.S.-Mexico-Canada Agreement, initiated by Trump, offers “stability” for investors. President Claudia Sheinbaum warned that imposing tariffs would lead to retaliation, risking companies that operate across borders, naming General Motors and Ford specifically. Sheinbaum’s statements were delivered during a press conference and were also sent to Trump in a letter.

Doug Ford, the Premier of Ontario, Canada, indicated the tariffs could be “devastating to employment and economic stability” in both nations.

A tariff functions as a tax levied by one country on imports from another. According to the U.S. Energy Information Administration, Canada’s top export to the U.S. is oil, while cars and their components are the largest imports from Mexico. Additionally, the U.S. imports a considerable amount of electronics from China, although some goods are exempt due to the U.S.-Mexico-Canada Agreement.

During his first term, Trump frequently utilized trade threats as a negotiating strategy, imposing tariffs on a vast array of Chinese imports. He initially aimed to finalize a new trade agreement with China, but those efforts were disrupted by the coronavirus pandemic in 2020.

It remains uncertain whether Trump will indeed implement his tariff plans.

However, imposing tariffs on U.S. trading partners has been a consistent feature of Trump’s economic strategy as highlighted in his campaign. He believes such actions will safeguard American jobs, increase tax revenues, and spark a revival in domestic manufacturing. Numerous economists warn, though, that such tariffs may raise inflation and lead to elevated interest rates.

Importers bear the cost of tariffs, not the exporting countries. Typically, these costs are passed on to consumers, resulting in higher prices for goods.

“Trump was elected to decrease grocery prices. These measures will dramatically increase prices for groceries,” commented Bill Penzey, the owner of Penzeys Spices, in an email prior to Trump’s declaration.

Trump has previously stated that once in power, he would declare a national emergency to facilitate the deportation of undocumented migrants.

“It’s impossible to substitute California Garlic for Chinese Garlic if all the skilled laborers in California’s garlic industry have been deported,” asserted Penzey, a known critic of Trump.

Andrew Law, founder of The Mexico Brief, expressed his view that Trump’s announcement is politically motivated rather than based on tariff policy.

“This declaration follows a recent diplomatic dispute between Mexico and Canada concerning imports from China. Following this, Mexico hastily enacted legislation to replace certain Chinese products with Mexican alternatives. Trump seems to be seizing this chance to further diminish China’s presence in the U.S. market,” Law noted in his commentary on Tuesday.

“This appears to be less of a policy statement and more of a strategic move aimed at causing disruption among allied nations. The intention? To elicit more concessions from Mexico and Canada regarding China. He’s stirring the pot to see what unfolds; it’s likely to succeed.”