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[What are your thoughts on the impact of tariffs as discussed in the article?]

Salwan Georges

President-elect Donald Trump’s <a href="https://www.washingtonpost.com/business/2024/11/25/trump-tariffs-china-mexico-canada-percent/" target=_blank>announcement</a> of planned tariffs next year on imports from the United States’ three largest trading partners is almost certainly the opening salvo in a high-stakes negotiation that will rattle businesses and governments on two continents.

Still almost two months from assuming the powers of the presidency, Trump is effectively threatening to blow up more than $2.1 trillion in annual two-way trade with Mexico, Canada and <a href="https://www.census.gov/foreign-trade/balance/c5700.html" target=_blank>China</a> if he does not win quick concessions on immigration and drug traffic. The potential upheaval would put at risk major supply chains, including for automakers and appliance manufacturers, and would be likely to raise prices for consumers.

Within hours of Trump’s Monday evening social media posts outlining plans to impose tariffs by executive order as soon as he is sworn in on Jan. 20, Canadian Prime Minister Justin Trudeau called the president-elect. Trudeau, who scheduled an emergency meeting with provincial premiers for Wednesday, said that he and Trump discussed “some of the challenges that we can work on together.” Mexican President Claudia Sheinbaum, meanwhile, <a href="https://www.washingtonpost.com/world/2024/11/26/mexico-canada-tariffs-response/" target=_blank>warned that she would retaliate</a> if Trump follows through — even if it led to “inflation and job losses” in both countries.

“For every tariff, there will be a response in kind, until we put at risk our shared enterprises,” Sheinbaum told reporters in Mexico City on Tuesday, referring by name to each of the Big Three U.S. automakers, Ford, General Motors and Stellantis.

Until Trump takes office, formal talks with foreign governments cannot begin. So Canada, Mexico and China, which he targeted in a second social media post, are facing months of uncertainty.

On Monday night, the president-elect said he would impose 25 percent tariffs on Mexico and Canada until they halt cross-border traffic in fentanyl and unauthorized migrants. He also vowed to hit China with a 10 percent import tax on top of any existing tariffs until Chinese authorities step up their efforts to interdict the Trans-Pacific fentanyl trade.

“It’s a big mistake to underestimate the president-elect’s determination to carry through his campaign promises. It’s also a mistake to think the [tariff] numbers are set,” said Myron Brilliant, senior counselor at DGA Group, a business advisory firm. “He is a transactional figure. He wants to cut deals and force other governments to make concessions to him.”

On Tuesday evening, Trump took another step toward finalizing his economic team, nominating Jamieson Greer, a partner at King &amp; Spalding in Washington, D.C., to be his chief trade negotiator. Greer served as chief of staff to U.S. Trade Representative Robert E. Lighthizer in Trump’s first term.

Under an unusual setup Trump announced earlier this month, Howard Lutnick, his choice for commerce secretary, will control the new administration’s “tariff and trade agenda” if confirmed, not the trade representative.

With Greer’s appointment, Lighthizer — who was expected to play a significant role shaping Trump’s second-term trade offensive — remains without a job.

<a href="https://www.washingtonpost.com/business/2024/11/17/trump-tariff-trade-imbalances/" target=_blank>Trump</a> appears “very serious” about his proposed tariffs, which are likely to be an “entry point” for negotiations, according to an individual who talks to the president-elect, speaking on the condition of anonymity to describe private discussions.

Financial markets delivered a mixed verdict. The Dow Jones Industrial Average and S&amp;P 500 index notched record highs. But companies that would be hurt by tariffs suffered. Shares of GM, which has extensive operations in Mexico, fell 9 percent.

The U.S. dollar rose by more than 2 percent against the Mexican peso and by less than 1 percent against the Canadian dollar.

The United States does not impose tariffs on most Mexican and Canadian goods, under a trade agreement negotiated during the first Trump administration known as the “United States-Mexico-Canada Agreement.” But most of the more than $425 billion in Chinese merchandise imported last year faced tariffs of up to 25 percent. Trump’s proposal would increase those rates.

Adding duties will raise prices for American importers, who directly pay the tariffs to U.S. Customs and Border Protection. In some cases, they may also erode profit margins for foreign manufacturers that ship to the United States. Price increases <a href="https://www.washingtonpost.com/business/2024/10/30/companies-tariffs-trump-prices/" target=_blank>passed along</a> to consumers will cost the average U.S. household more than $2,000 per year, according to the nonpartisan National Taxpayers Union.

“While we’re all familiar with the president-elect’s <a href="https://www.washingtonpost.com/business/2024/11/08/trump-tariffs-economy-global-trade/" target=_blank>fondness for tariffs</a> as a negotiating tool, it’s particularly troubling that he’s threatening to aim them at America’s closest allies and trading partners on the very first day of his administration,” said Jake Colvin, president of the National Foreign Trade Council, an industry group. “Tariffs are costly for businesses and consumers.”

Many business leaders seemed resigned to renewed turmoil under Trump, who often announced new policies in unexpected social media posts at any hour during his first term.

One Trump donor, speaking on the condition of anonymity to reflect private talks, said that he and some other Trump allies in the business community are not panicking because they view the tariffs primarily as a negotiating tactic — a starting point for extracting concessions on the border, not a long-term policy.

Andy Sabin, another Republican donor who supports Trump, said Tuesday he was not concerned about the tariffs’ implications for business, either.

“I personally don’t believe he’s going to do all that,” Sabin said. “And I think most people think he’s just shooting off his mouth … He’s going to be good for business, but he’s not going to be extreme.”

The Mexican government will probably be open to negotiating a solution to Trump’s complaints, according to Jorge Guajardo, former Mexican ambassador to <a href="https://www.washingtonpost.com/business/2024/10/28/china-investment-treasury/" target=_blank>China</a>.

“If he is truly doing this because of immigration and fentanyl, there are ways Mexico can address these issues and overcome these hurdles,” he said.

Likewise, Canadian officials are prepared to cooperate, as Trudeau suggested when he spoke to Trump late Monday. But if a tariff war erupts, Canada will hit back.

“Canada will retaliate in ways aimed at maximizing harm to constituencies Trump needs, especially agriculture. Canada has strong supporters in Congress, in state governments and in U.S. businesses that export. They have a strategy for mobilizing all that support,” said Edward Alden, a senior fellow at the Council on Foreign Relations.

The 2020 USMCA, which Trump negotiated to replace the North American Free Trade Agreement, is scheduled for a review in 2026. Trump officials already were expected to seek changes in the treaty that would prevent Chinese manufacturers from using Mexico as a base to escape U.S. tariffs.

Prospects for negotiations with China may be more limited. Trump campaigned on a promise to impose tariffs of 60 percent on all Chinese goods, repeal China’s routine trade status, known as Permanent Normal Trade Relations, and “phase out imports of essential goods.”

On X, Liu Pengyu, a spokesman for the Chinese Embassy in Washington, wrote, “No one will win a trade war or a <a href="https://x.com/hashtag/tariff?src=hashtag_click" target=_blank>#tariff</a> war.”

Trump’s announcement caught some business leaders by surprise. But the president-elect was unequivocal in linking trade policy with his long-standing complaints about drugs and migrants crossing U.S. borders.

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!” he wrote.

Trump’s claims that the borders are out of control are belied by Customs data showing lower levels of illegal crossings than during the final months of his first term. U.S. agents tallied 56,530 arrests along the southern border in October, according to the most recent data, compared to 69,032 in October 2020.

Illegal crossings averaged 2 million per year during President Joe Biden’s first three years in office, the highest levels ever recorded. But under U.S. pressure, the Mexican government this year launched a militarized crackdown, arresting record numbers of would-be migrants. That enforcement blitz and the Biden administration’s new restrictions on access to the asylum system have slashed crossings nearly 80 percent over the past 10 months, CBP data show.

Some Republicans have raised alarms about illegal crossings from Canada, which rose to a record 23,721 during the 2024 fiscal year, which ended Sept. 30. But last month, U.S. agents made 1,283 arrests along the entire northern border. That works out to about 41 arrests per day along the 5,525-mile border, the longest international boundary in the world.

The U.S. government has limited ability to determine how much fentanyl is crossing its borders, but Trump’s depiction of the deadly drug pouring across freely has no basis in seizure data.

About 85 percent of fentanyl seizures occur at official border crossings, where the potent drug is typically smuggled by pedestrians or hidden inside vehicles. Most of the rest is confiscated at Border Patrol highway checkpoints, not in the backpacks of migrants crossing the border.

The Biden administration has invested billions into sophisticated scanning equipment, increasing the percentage of vehicles that can be screened. The amount of fentanyl seized at the U.S.-Mexico border declined during the 2024 fiscal year to 21,100 pounds, down from 26,700 pounds the previous year, an all-time high. Experts are debating whether that was the result of less effective enforcement or a decline in smuggling attempts.

Authorities in Canada have busted several illegal fentanyl labs in recent years, but there is little evidence indicating traffickers are smuggling the drug across the northern border in significant quantities. During the fiscal year that ended Sept. 30, CBP confiscated 43 pounds of fentanyl along the northern border, equal to 0.2 percent of seizures along the southern border.

The U.S. Sentencing Commission <a href="https://www.ussc.gov/sites/default/files/pdf/research-and-publications/quick-facts/Fentanyl_FY23.pdf" target=_blank>found</a> that U.S. citizens accounted for 86 percent of fentanyl trafficking convictions during the 2023 fiscal year.

Fentanyl has produced the deadliest drug epidemic in U.S. history, but the latest public health data <a href="https://www.washingtonpost.com/health/2024/10/07/overdose-deaths-decline/" target=_blank>indicates</a> a drop in fatal overdoses over the past year.

Nieman fellowship at Harvard University, 2002

National Press Foundation's Hinrich Award for Distinguished Reporting on Trade, 2021

When The Luck of The Irish Ran Out: The World's Most Resilient Country and Its Struggle To Rise Again

Yale University, MA in international relations, 1983

Wesleyan University, BA in government, 1981

David J. Lynch is a staff writer on the financial desk who joined The Washington Post in November 2017 after working for the Financial Times, Bloomberg News and USA Today.

David J. Lynch

Maria Moors Cabot Prize, 2017

Overseas Press Club award, 2015

Overseas Press Club citation, 2012

Nancy Dickerson Whitehead Award, 2008

University of California at Berkeley Graduate School of Journalism, MJ, 2006

University of California at Santa Cruz, BA, 2000

Nick Miroff covers the Department of Homeland Security for The Washington Post, with a focus on immigration enforcement and the southern border. He was a Post foreign correspondent in Latin America from 2010 to 2017, and has been a staff writer since 2006.

Nick Miroff

Stanford University, BA in English

Hannah Knowles is a national politics reporter covering campaigns at The Washington Post. She previously reported for The Post's general assignment desk.

Hannah Knowles

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