‘Unacceptable’: Mexico, Canada reply to Donald Trump’s tariff pledge

Washington: Mexico and Canada have hit back at Donald Trump’s tariff plans, warning about the potential economic impact and urging the president-elect to choose co-operation over the prospect of retaliatory trade wars.

In an ominous but unsurprising development this week, Trump announced on social media that he intended to slap heavy tariffs on America’s neighbours and top trading partners as soon as he returns to the White House in January.

Donald Trump speaks on the southern border with Mexico in August. Only a fraction of his “beautiful wall” was built during his first term – and mainly to replace older dilapidated sections.Credit: AP

On Tuesday (Wednesday AEDT) he also tapped former first term administration official and lawyer Jamieson Greer to be his top trade representative to help oversee the policy and rewrite trade rules in America’s favour.

Under Trump’s plan, a 25 per cent tariff would be imposed on Canada to the north and Mexico to the south unless they crack down on drugs and illegal immigrants coming across the border.

In addition, he threatened “an additional 10 per cent tariff” on top of tariffs already in place on Chinese goods unless the country implements the death penalty for drug dealers connected to the fentanyl trade.

But as global markets digested the news, Mexico President Claudia Sheinbaum warned the tariff hike would fail to curb illegal migration or the consumption of illicit drugs in the US.

Mexico President Claudia Sheinbaum said the tariffs would hurt her country and the US.Credit: Getty Images

She also described the plan as “unacceptable” and something that “would cause inflation and job losses in Mexico and the United States”. The US auto industry, for example, depends heavily on Mexico and Canada for parts and manufacturing.

“One tariff will follow another and so on, until we put our common businesses at risk,” Sheinbaum said in a letter to Trump, which she read at her daily press conference and planned to send to him later in the day.

“Dialogue is the best path to achieve understanding, peace and prosperity for our two countries … I hope our teams can meet soon.”

Mexico is currently the United States’ top trade partner, representing 15.8 per cent of total trade, followed by Canada at 13.9 per cent.

But Trump made it clear during his election campaign that he would readily use tariffs as leverage to tackle the tide of illegal immigrants.

After Trump’s social media post, Canadian Prime Minister Justin Trudeau spoke to the president-elect as he sought to reduce concerns about the potential impact on his country’s economy.

Trevor Tombe, an economist who authored a report on the consequences of US tariffs on the Canadian economy, warned a recession was likely if Trump followed through on the 25 per cent tariff.

The country’s provincial premiers have warned a trade war would cause immense damage to their respective economies, while the Canadian dollar fell to its lowest level since May 2020.

Trudeau, who has called an emergency meeting with worried premiers for Wednesday (Thursday AEDT), told reporters he had a “good call” with Trump.

Then-president Donald Trump and Canadian Prime Minister Justin Trudeau in 2019. Trudeau, said this is a relationship which “takes a certain amount of working on” as he seeks to address concerned Canadian provincial premiers. Credit: AP

“We obviously talked about laying out the facts, talking about how the intense and effective connections between our two countries flow back and forth,” he said.

“This is a relationship that we know takes a certain amount of working on, and that’s what we’ll do.”

In an echo of Trump’s politics, Trudeau initiated a U-turn on immigration, restricting flows of new migrants. He said last week Canada’s system had been exploited by “bad actors”.

Trump’s vision for tariff hikes on Mexico, Canada and China were laid out in a Truth Social post.

“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,” he said.

In a follow-up post, he also announced that the US “will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America”.

The reason, he said, was China’s failure to curb the number of drugs entering the US. China is a major producer of precursor chemicals that are acquired by Mexican drug cartels and others to manufacture fentanyl, a synthetic opioid that accounts for about 70 per cent of all drug overdoses in the US.

“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 said.

However, Chinese Embassy spokesperson Liu Pengyu said neither Beijing or Washington “will win a trade war”.

“China remains ready to continue counternarcotics cooperation with the US on the basis of equality, mutual benefit and mutual respect.”

“We hope the US will not take China’s goodwill for granted and work to ensure that the hard-won positive dynamics will stay in the counternarcotics cooperation,” he said in a statement.

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