President-elect threatens bombshell 25% levy beginning on day one of presidency
US president-elect Donald Trump has issued a bombshell warning to impose a 25% tariff on all products entering the country from Canada and Mexico starting on the first day of his new administration.
In a post on his social media platform Truth Social on Monday evening, Trump said he would introduce the measure in an effort to put pressure on both bordering countries to halt passage of drugs and illegal immigrants into the US.
"This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" Trump declared. He said both Mexico and Canada have the "absolute right and power to easily solve this long simmering problem."
The proposed tariff immediately sent shockwaves through financial markets, sending the Canadian dollar through a sharp decline before it partially recovered. The economic impact could be huge, with damage to Canada's GDP projected in the range of less than half a percentage point to potentially devastating 5%.
Per reports, prime minister Justin Trudeau immediately reached out to Trump and highlighted Canada's efforts within recent weeks to address concerns at the border with the US. This includes reinstituting visa requirements for Mexican tourists and targeted immigration reduction.
Ontario premier Doug Ford described the prospective tariff as “devastating to workers and jobs” in both Canada and the United States. He called for a unified “Team Canada” approach, urging a broad strategy involving provincial leadership in navigating the potential economic challenge.
During his first presidency between 2016 and 2020, Trump was known to dangle threats before trading partners and rivals in the course of negotiations before backing away or reversing tack from those proposals, although it remains unclear whether he fully intends to implement the tariff as proposed when his next administration begins.
Trump is due to be sworn in as US president in Washington, DC on January 20, 2025.
