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True to the Trump modus operandi, the announcement was made on social media, and ups the ante on the president-elect’s rhetoric on being tough on trade and tariffs.
“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,” Donald Trump wrote on Truth Social, asserting that “thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before.”
Trump said the new tariffs would remain in place “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
In a separate post, Trump also critiqued China, saying he has “had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States — But to no avail.”
“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 wrote.
Some US steel market participants welcomed this news.
“The announcement by president-elect Trump that imports from Canada and Mexico will be subject to new tariffs is welcome news for the US steel construction industry,” a steel fabricator told Fastmarkets on Tuesday November 26. “Fabricated structural steel has been streaming across the borders tariff-free for a decade, undermining the domestic fabrication industry that we need to build secure critical infrastructure projects.”
A second construction steel fabricator similarly said: “Business owners feel much better with Trump leading the country. More opportunities will be created during a Trump presidency than [they would’ve] during a Harris presidency.”
“During his first presidency, Trump needed to figure out how Washington worked. This time, he is going in with a plan and a good team,” the second fabricator said.
Regarding the new tariffs on the US’s close trading partners, the second fabricator said, “I am still [fully] determining [the impact of] Trump’s comments [on tariffs]. [The new Trump administration] are telling other countries they better tighten up, or there will be changes.”
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Samir Kapadia, principal and chief operating officer at the Vogel Group, a bipartisan government affairs and consulting firm based in Washington DC, told Fastmarkets that under Trump, US “trade policy can be determined by nearly anything at this point.”
“It’s not just limited to trade disparity arithmetic, forced labor concerns or national security,” Kapadia said on Tuesday.
“I don’t find it surprising at all that Mexico is being targeted in this announcement,” Kapadia said. “Mexico has gone well over historical averages in exports of steel to the United States since the signing of USMCA,” Kapadia said, referring to the United States-Mexico-Canada Agreement, the 2020 trade deal signed into law by Trump in 2018 during his first presidency, which replaced the North American Free Trade Agreement, and is up for review in 2026.
Many domestic players in the US have been harsh critics of Mexico’s role in the USMCA and expect the Trump administration to rework the trade deal.
“[Mexican companies] have also ignored concerns around best environmental and labor practices,” Kapadia said. “To add further insult to injury, there has also been a record level of Chinese investment into Mexico, particularly in the automotive industry. That doesn’t please unions or the far right that want to rebuild Detroit. Many in Washington, both Republicans and Democrats, consider Mexico to be a hostile trade partner.”
A Mexican trader said their company was “reviewing and analyzing different alternatives since Trump was elected.”
“We are aware that this might be a big issue at the moment,” the Mexican steel trader said, and added that Mexico and Canada will likely impose tit-for-tat tariffs if Trump carries out his threat.
“Mexico and Canada will be doing the same to the US if this happens, and probably between one to three months there will be negotiations that will be benefit all of us,” the Mexican trader said on Tuesday.
The Mexican trader said while those negotiations are ongoing, their company will likely stop exporting steel products to the US, or pass on the extra cost to the final customer in the US.
“During those three months we might stop shipping, or negotiate the additional tariffs to the final customers, and steel prices in US might go up,” the Mexican trader said.
“Trump also has to manage inflation, and this can push prices up as well,” the Mexican trader said, repeating a common concern that Trump’s tariffs will ultimately push up costs for US consumers.
The first fabricator also speculated about the legality of imposing tariffs on a trade partner such as Mexico.
“It sounds great, but I’m not sure what the legal basis is,” the first fabricator said. “You have tariffs under Section 301 with China. I’m not sure what the legal basis is within the framework of the USMCA. And Section 232 tariffs only cover steel.”
The US Trade Representative (USTR) Katherine Tai under current President Joe Biden increased tariffs on Chinese imports under Section 301, with the tariff rate on certain steel and aluminium products increasing from 0-7.5% to 25% in 2024.
The tariff increases under Section 301 on steel and aluminum imports from China were finalized on September 27.
Additionally, the Biden administration levied a 25% tariff under Section 232 on steel and aluminium shipped from Mexico that is melted and poured outside of North America as an addendum to the USMCA, and this came into effect on July 10.
A second trader source questioned the relation between illegal immigration and trade tariffs.
“Tariffs and illegal immigration — I don’t see how these two things are connected,” the second trader said. “I’m a little skeptical about this. I can understand that it is a good thing to end illegal immigration. Tariffs, however, will increase prices. People think it is Mexico and Canada who are paying. It is not. The American consumer will be paying.”
The second trader told Fastmarkets that Trump’s love for tariffs is a “negotiating tactic.”
The first fabricator source noted that under Trump, additional tariffs can be levied by the executive branch of the government.
“Under the incoming administration, tariffs can be done more directly by the executive branch than by an act of Congress,” the first fabricator said. “This is an easier policy tool to manipulate than trade agreements. The President has a lot of authority under law to impose tariffs. It’s more of an executive action and he’s more likely to use those tools.”
The first fabricator noted that currently “Canada and Mexico are exempt from Section 232 tariffs, but the USMCA provides for surge protection [through exemptions]. If there is a surge [from Canada or Mexico], it could be expanded to cover them.”
Notably, Trump’s nominee for treasury secretary Scott Bessent has lauded tariffs as a powerful tool for trade negotiations.
Bessent wrote in a Fox News op-ed on November 15 that tariffs are “a useful tool for achieving the president’s foreign policy objectives. Whether it is getting allies to spend more on their own defense, opening foreign markets to US exports, securing cooperation on ending illegal immigration and interdicting fentanyl trafficking, or deterring military aggression, tariffs can play a central role.”
This is not the first time that Donald Trump has singled out Mexico, which was often a rally point during his campaigning days.
“I’m going to inform her, on day one or sooner, that if they don’t stop this onslaught of criminals and drugs coming into our country, I am going to immediately impose a 25% tariff on everything they send into the United States of America,” Trump said on November 4, the final day of campaigning at a rally in North Carolina, referring to Mexican President Claudia Sheinbaum.
The Mexican president said she is going to send a letter to Trump in response, and held a press conference on Tuesday morning, where she floated the idea of retaliatory tariffs, and pointed out that many US automakers have manufacturing plants in Mexico, and that retaliatory tariffs will only raise prices for the average American consumer.
“I am convinced that we will find an agreement with President Trump,” Sheinbaum said during the press conference.
“What we want to say in the letter is that raising tariffs […] on Mexico, which would mean that this side could also raise tariffs, will ultimately harm companies that work in Mexico and the US,” she said.
“If tariffs are raised here, they will harm General Motors [for example], that are some of the main exporters from Mexico to US,” the Mexican president said.
“But the main ones affected will be consumers in the United States, who buy vehicles from General Motors, because raising tariffs will increase prices. This will make them [United States] less competitive compared with other economies, to other economic blocs in North America.”
“What is the point of “tariffs with tariffs with tariffs” if in the end it will only lead to a loss of competitiveness in North America?” Sheinbaum said on Tuesday.
Canadian Prime Minister Justin Trudeau reportedly had a phone call with Trump shortly after the president-elect’s social media posts, which the Canadian premier confirmed on Tuesday.
“We talked about some of the challenges that we can work on together and it was a good call,” Trudeau said in media reports. “It’s something that we can do laying out the facts moving forward in constructive ways.”
The Chinese Embassy in Washington posted on social media on Monday that there are no winners in a trade war.
“China-US economic and trade cooperation is mutually beneficial in nature,” embassy spokesperson Liu Pengyu wrote on X [previously known as Twitter]. “No one will win a trade war or a #tariff war.”
Alesha Alkaff in Washington and Melissa VanDervort in Pittsburgh have contributed to this article.