President-elect Donald Trump made a strong promise to put high taxes, called tariffs, on products coming from the U.S.'s three biggest trading partners, Canada, Mexico, and China. He shared these plans in posts on Truth Social, explaining what he will do when he becomes president on January 20, 2025. These tariffs could lead to trade conflicts between countries and are some of his clearest comments on his economic plans since he won the election.

Trump said he would charge a 25% tax on all goods coming from Canada and Mexico. His goal is for both countries to do more to stop drugs, especially fentanyl, and to limit people crossing the U.S. border. This plan might break the U.S.-Mexico-Canada Agreement (USMCA), which is a trade deal that started in 2020 and allows these countries to trade without big taxes. The U.S. gets most of its goods from Mexico and Canada, with Mexico sending over 83% of its exports to the U.S. and Canada sending 75%.

Trump also said he plans to charge a 10% tax on all goods coming from China, on top of any current taxes. It's not fully clear what this will mean, especially because Trump had earlier promised to remove China's special trade status and add even higher taxes on Chinese goods. This could be a big change from his first term, when he already used high trade taxes as part of his economic plan.

Global markets react to Trump's tariff announcement

When Trump announced these new tariffs, the value of the U.S. dollar went up. It increased by 1% compared to the Canadian dollar and by 1.6% against the Mexican peso. However, this news worried stock markets around the world. Markets in Asia and Europe went down, but the S&P 500 futures stayed mostly the same, showing that investors had mixed reactions.

Trump's promise to impose a 25% tariff on Canada and Mexico could cause problems for companies outside the U.S. For example, many companies from Asia that make cars and electronics in Mexico to sell in the U.S. might face higher costs. This could make their products more expensive for U.S. buyers.

Trump's plan could face opposition, mainly from Mexico and Canada. But it looks like he's using the threat of tariffs to push for changes in trade rules. After announcing the tariffs, Trump had a talk with Canadian Prime Minister Justin Trudeau, and they agreed to stay in contact. William Reinsch, a former leader of the National Foreign Trade Council, thinks Trump might be using this threat to try to change the USMCA trade agreement.

Mexican officials, such as Ricardo Monreal, who leads Mexico's lower house, said that using trade punishments would hurt regular people and wouldn't fix bigger problems like human trafficking and drug smuggling.