Donald Trump threatens 25% tariff on products from Canada, Mexico

Donald Trump has levelled his most severe threat against Canada in years, warning that on his first day in office he might impose punishing economic sanctions across North America.

The U.S. president-elect threatened Monday evening to slap a 25 per cent tariff on all products entering the country from Canada and Mexico on Jan. 20, 2025, his inauguration day, unless those countries curb the flow of drugs and migrants across their 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!" Trump wrote on his social media platform Truth Social.

"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!"

The warning sent the Canadian dollar diving nearly a cent at one point, before it recovered somewhat. 

Such an import fee would incur untold economic damage, driving up costs for Canadian and Mexican goods in their most critical market.

This all unfolded, coincidentally, as Canadian cabinet ministers were meeting to discuss U.S. relations, said a federal source.

The news also prompted a flurry of late-evening phone calls: between Prime Minister Justin Trudeau and Trump, and between Trudeau and several provincial premiers, in an effort to defuse the danger to Canada's economy.

"It was a good discussion and they will stay in touch," a Canadian official said of the Trudeau-Trump call. The prime minister also spoke with the premiers of Ontario and Quebec. 

Trump's complaint about the Canadian border didn't come out of nowhere. Irregular migration through Canada into the U.S. has multiplied in recent years. Trump's incoming border czar Tom Homan has repeatedly referred to the northern border as a national-security threat; an easy access point for terrorists.

Yet in terms of overall numbers there's no comparing the northern and southern borders. Among all the people stopped by U.S. Border Patrol trying to enter the U.S. in-between checkpoints last year, cases on the Canadian side amounted to barely one per cent of the total.

Trudeau pointed that out to Trump during their call, the federal source said. Canada has also taken steps in recent months to address U.S. concerns, re-imposing visa requirements on travellers from Mexico, and announcing different cutbacks in immigration. 

It's unclear whether Trump actually intends to proceed with the idea as described. One feature of his first term was occasionally issuing trade threats as part of a negotiation.

Early in his presidency, Trump was on the verge of declaring his intention to cancel the North American Free Trade Agreement, just before negotiations began on the updated deal.