Trump says he will impose new tariffs on China, Canada and Mexico

Announcement sees US dollar rally while Mexican peso and Canadian dollar slump

President-elect Donald Trump said he would sign an executive order on his first day to impose the new tariffs. Reuters

President-elect Donald Trump has said he will impose an extra 10 per cent tariff on goods from China and a tariff of 25 per cent on all products from Mexico and Canada, saying the additional levies will force America's neighbours to do more to stop migrants and illegal drugs flowing across US borders.

The announcement sparked a dollar rally. It rose 1 per cent against the Canadian dollar and 2 per cent against the Mexican peso, while share markets in Asia fell, as did European equity futures.

In posts to his Truth Social network late on Monday, Mr Trump claimed China had failed to follow through on promises to institute the death penalty for traffickers of fentanyl.

“Drugs are pouring into our country, mostly through Mexico, at levels never seen before,” Mr Trump wrote.

“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.”

He outlined the tariffs against Mexico and Canada in a separate post, noting the 25 per cent tariff would be on “all products.” He said he would sign an executive order on his first day in office.

Mr Trump’s tariff threats highlight how the incoming president aims to use trade levies to introduce his policy agenda, despite concerns from some business leaders about the impact. It comes just days after he picked pro-tariff billionaire Scott Bessent as the next US Treasury Secretary.

Mr Trump campaigned on pledges to introduce sweeping tariffs on allies and adversaries alike, vowing to increase tariffs to 60 per cent for all goods imported from China and to 20 per cent for those brought in from the rest of the world – policies he says will help pressure companies to restore manufacturing jobs in the US and raise revenue for the federal government.

The Republican has long said he favours tariffs as a negotiating tool, even with US partners, and during the presidential campaign, he mused about replacing the federal income tax with revenue from tariffs. Most mainstream economists though have warned that Mr Trump’s levies would raise prices for consumers, fuelling already high inflation and redirecting or reducing trade flows.

A 25 per cent tariff applied to all imports from Canada would put pressure on energy costs. Oil, gas and other energy products are Canada’s largest exports to its southern neighbour; it’s by far the largest external supplier of crude to the US. Wilbur Ross, Mr Trump’s former Commerce secretary, said earlier this month that duties on Canadian energy would raise prices for Americans and do little to grow US jobs.