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Trump: 25% tariff on Mexico, Canada over fentanyl,

migration

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"Additional" 10% tariff planned on China

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China: No one will win a trade war

By Costas Pitas

Nov 25 (Reuters) - President-elect Donald Trump on

Monday pledged big tariffs on the United States' three largest

trading partners - Canada, Mexico and China - detailing how he

will implement campaign promises that could trigger trade wars.

Trump, who takes office on Jan. 20, 2025, said he would

impose a 25% tariff on imports from Canada and Mexico until they

clamped down on drugs, particularly fentanyl, and migrants

crossing the border, in a move that would appear to violate a

free-trade deal.

Trump also outlined "an additional 10% tariff, above any

additional tariffs" on imports from China, in some of his most

specific comments on how he will implement his economic agenda

since winning the Nov. 5 election on promises to "put America

first".

"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 post on Truth Social.

While migrant arrests reached a record during President Joe

Biden's presidency, straining U.S. border enforcement, illegal

crossings fell dramatically this year as Biden instituted new

border restrictions and Mexico stepped up enforcement.

More than 83% of exports from Mexico went to the U.S. in

2023 and 75% of Canadian exports go to the country.

The tariffs also potentially spell trouble for overseas

companies like the many Asian auto and electronics manufacturers

that use Mexico as a low-cost production gateway for the U.S.

market.

Trump's threatened new tariff would appear to violate the

terms of the U.S.-Mexico-Canada Agreement on trade. The deal

which Trump signed into law took effect in 2020, and continued

the largely duty-free trade between the three countries.

Canada and the United States at one point imposed sanctions

on each others' products during the rancorous talks that

eventually led to USMCA. Trump will have the opportunity to

renegotiate the agreement in 2026, when a "sunset" provision

will force either a withdrawal or talks on changes to the pact.

After issuing his tariff threat, Trump held a conversation

with Canada's Prime Minister Justin Trudeau in which they

discussed trade and border security, a Canadian source familiar

with the situation said.

"It was a good discussion and they will stay in touch," the

source said.

Trump could be counting on the threat of tariffs to prompt

an early renegotiation of USMCA, said William Reinsch, a former

president of the National Foreign Trade Council.

"This strikes me more as a threat than anything else,"

Reinsch said. "I guess the idea is if you keep hitting them in

the face, eventually they'll surrender."

Mexico's lower house leader Ricardo Monreal, a member of the

ruling Morena party, urged "the use of bilateral, institutional

mechanisms to combat human, drug and arms trafficking."

"Escalating trade retaliation would only hurt the people's

pocketbooks and is far from solving underlying problems," he

said in a post on social media platform X.

Trump's announcement sparked a dollar rally. It rose 1%

against the Canadian dollar and 2% against the Mexican

peso, while share markets in Asia fell, as did European

equity futures. S&P 500 futures fell

0.3%.

CHINA: NO ONE WINS TRADE WARS

On China, the president-elect accused Beijing of not taking

strong enough action to stop the flow of illicit drugs crossing

the border into the U.S. from Mexico.

"Until such time as they stop, we 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,"

Trump said.

A Chinese embassy spokesperson in Washington hit back.

"China believes that China-U.S. economic and trade

cooperation is mutually beneficial in nature. No one will win a

trade war or a tariff war," Liu Pengyu said.

The embassy also cited steps it said China had taken since a

2023 U.S.-China meeting after which Beijing agreed it would stem

the export of items related to the production of the opioid

fentanyl, a leading cause of drug overdoses in the United

States.

"All these prove that the idea of China knowingly allowing

fentanyl precursors to flow into the United States runs

completely counter to facts and reality," the spokesperson said.

Trump has previously pledged to end China's

most-favored-nation trading status and slap tariffs on Chinese

imports in excess of 60% - much higher than those imposed during

his first term.

The Chinese economy is now in a much more vulnerable

position given the country's prolonged property downturn, debt

risks and weak domestic demand.

In the run-up to the Nov. 5 election, Trump floated plans

for blanket tariffs of 10% to 20% on virtually all imports. He

also said he would put tariffs as high as 200% on every car

coming across the U.S.-Mexico border.

He also voiced his intent to formally invoke the USMCA's

six-year review provision upon taking office. Currently, it is

expected in July 2026.

Mexico's finance ministry said of Trump's tariff pledge:

"Mexico is the United States' top trade partner, and the USMCA

provides a framework of certainty for national and international

investors."

Economists say that Trump's overall tariff plans, likely his

most consequential economic policy, would push U.S. import duty

rates back up to 1930s-era levels, stoke inflation, collapse

U.S.-China trade, draw retaliation and drastically reorder

supply chains.

They say tariffs are paid by the companies that import the

products subject to the duties, and they either pass on the

costs to consumers or accept lower profits.

Trump frequently refers to countries paying as a consequence

of his tariff plan, saying on Monday that Mexico and Canada will

"pay a very big price."

(Additional reporting by Kylie Madry, Jasper Ward, David

Lawder, Andrea Shalal, David Ljunggren and Brendan O'Boyle;

Editing by Rami Ayyub and Stephen Coates)