Donald Trump threatens 25% tariff on products from Canada, Mexico

On January 20th, 2025, Donald Trump has issued a stern warning to Canada and Mexico, threatening to impose a 25 per cent tariff on all products entering the United States from these countries. The announcement was made on his social media platform Truth Social, where he expressed concerns about migration and drug issues at the northern and southern borders.

In his post, Trump stated that this tariff would remain in effect until both Mexico and Canada take action to address the flow of drugs, particularly Fentanyl, and illegal immigrants into the United States. He emphasized that both countries have the power to solve these issues and demanded that they do so, or face the consequences of hefty tariffs on their exports.

The news of this threat caused the Canadian dollar to plummet to a record low in overnight trading, prompting discussions among Canadian cabinet ministers about the future of U.S. relations. Prime Minister Justin Trudeau has reestablished a cabinet committee specifically focused on Canada-U.S. relations in anticipation of potential challenges under Trump’s administration.

While it remains unclear whether Trump will follow through with this tariff threat, his history of using tariffs as a negotiation tactic raises concerns. During his first term, he imposed tariffs on Canadian steel and aluminum before eventually negotiating exemptions. The uncertainty surrounding Trump’s intentions has led to speculation about the potential impact on the Canadian economy, with projections ranging from minor setbacks to significant losses in GDP.

The announcement of this tariff threat has reignited memories of past trade tensions between the U.S. and Canada, including Trump’s threats to cancel NAFTA and impose tariffs on Canadian automobile exports. The automotive industry in Canada is particularly concerned about the implications of such tariffs, as they could have a significant impact on both Canadian and American workers and jobs.

Despite the uncertainty and challenges posed by Trump’s tariff threat, industry experts and government officials are urging patience and a unified approach to address the situation. It is essential for Canada to maintain open communication channels with the U.S. government and work towards finding mutually beneficial solutions to trade issues. As the situation unfolds, it is crucial for Canadian businesses and policymakers to remain vigilant and adaptable to navigate the changing trade landscape.