China’s exports to Southeast Asia and US imports from ASEAN have increased as the region becomes a hub for assembling and packaging Chinese components for American markets.
Donald Trump, the newly elected 47th President of the US, has now announced plans to impose significant tariff increases on imports from Mexico, Canada, and China beginning his first day in office. Trump stated that the policy is intended as a response to issues such as illegal immigration, along with the influx of “crime and drugs” across the border. This approach could increase considerable costs for American businesses and consumers.
In an interaction with the American media, the Republican President-elect said, “On January 20th, as part of my initial actions as President, I will issue an Executive Order to implement a 25% tariff on all imports from Mexico and Canada,” Trump declared. “This tariff will stay in place until the flow of illegal drugs, especially fentanyl, and the entry of unauthorized immigrants, which I consider an invasion of our nation, is fully halted.”
Trump also announced plans for “an additional 10% tariff, on top of any existing tariffs,” targeting imports from China. The specifics of this proposal remain unclear, especially since he has previously vowed to revoke China’s most-favoured-nation trade status and impose tariffs exceeding 60% on Chinese goods—significantly higher than the rates during his first term.
In retaliation, Chinese Embassy spokesperson Liu Pengyu emphasized that China views economic and trade relations with the US as mutually beneficial, stating that “no one wins in a trade war or a tariff war.” Meanwhile, Mexico’s President Claudia Sheinbaum addressed the president-elect’s announcement on Tuesday, asserting that “neither threats nor tariffs will resolve the challenges of migration or drug consumption.”
Trump’s proposed tariffs may breach the USMCA, a trade deal he signed in 2020 ensuring largely duty-free trade among the US, Mexico, and Canada. During its negotiation, Canada and the US imposed sanctions on each other. The agreement includes a “sunset” clause requiring renegotiation or withdrawal by 2026.
If enacted, the proposed tariffs could disrupt US supply chains, harm key industries, and add $272 billion annually to tax burdens. They would raise prices on everyday goods, increase interest rates, and strain vulnerable households. While some investors saw the potential for a stronger dollar, financial markets reacted negatively to the dramatic cost increases.
