President Trump said on Monday that he expects to put 25% tariffs on Canada and Mexico starting on Feb. 1, while declining to flesh out his plans for taxing Chinese imports.
Trump made the announcement in response to reporters’ questions while signing executive actions in the Oval Office on his first day back in the White House.
Trump threatened tariffs of as much as 60% on China during his campaign but appeared to temper his plans after a phone call last week with Chinese President Xi Jinping. He said Monday there would be more discussions with his counterpart in the world’s second largest economy.
“We’re going to have meetings and calls with President Xi,” Trump said.
Trump is placing a big bet that his executive actions can cut energy prices and tame inflation and that the tariffs will strengthen the economy instead of exposing consumers to higher prices. But it’s unclear whether his orders will be enough to foster the growing economy with lower prices that he promised voters.
Trump specifically blamed the inflation on the $1.9 trillion in pandemic aid provided in 2021 by then-President Joe Biden, while saying that his predecessor’s policies restricted oil drilling despite domestic output being near record levels.
“The inflation crisis was caused by massive overspending,” Trump said in his inaugural address.
Still, Trump wanted to make clear on Monday in his speeches that he was eager to impose taxes on imports.
Trump pledged in his inaugural address that tariffs would be coming and said foreign countries would be paying the trade penalties, even though those taxes are currently paid by domestic importers and often passed along to consumers. Trump later on Monday said tariffs would “make us rich as hell.”
A top official with the Canadian government said it would be prepared for almost all possibilities regarding the status of trade with the United States.
“Perhaps he’s made decisions to sort of suspend the threat of tariffs over a whole slate of countries. We will wait and see,” Canadian Finance Minister Dominic LeBlanc said. “Mr. Trump has been in a previous mandate unpredictable, so our job is to make sure we are ready for any scenario.”
A big driver of inflation is a persistent housing shortage, and U.S. oil production is already at record levels, with producers facing uncertainty about global demand this year. The Federal Reserve is technically the government body tasked with keeping inflation at a roughly 2% annual target. Its usual levers are setting short-term rates for banks’ lending to each other, in addition to bond purchases and public communications.