Summary

  • Donald Trump says he will introduce 25% tariffs on goods coming from Canada and Mexico on day one of his presidency

  • He also vows to add an extra 10% on goods coming from China - imports from there to the US are already subject to some tariffs

  • For context: A tariff is a tax paid on goods as they enter a country. The company importing the goods pays the tax, not the foreign company that exports them

  • China calls the tariffs "irresponsible" and warns that no-one will win a trade war, while Mexico's president says tariffs will not solve the US's drug problem

  • Canadian PM Justin Trudeau - who spoke to Trump last night - has called a meeting with his country's premiers after they warned a 25% tariff would be "devastating" for workers

  • But there's a suggestion Trump's plan may have room for negotiations, North America correspondent Anthony Zurcher writes

Live Reporting

Edited by Brandon Livesay in New York and Caitlin Wilson in Washington DC

  1. Trump's 'border tsar' heads to US-Mexico border

    Toman Homan visits with border patrol agents in Texas in 2018Getty Images

    Homan visiting border patrol agents in Texas in 2018

    Tom Homan - Trump's appointed 'border tsar' - is heading to Texas on Tuesday to meet with the state's governor and inspect conditions along the US-Mexico border.

    Trump made illegal immigration a major focus of his campaign, describing southern border crossings from Mexico as an "invasion of illegal aliens". He has vowed to swiftly end it, including using the US military to help with mass deportations.

    After he won the election in November, he quickly began assembling his transition team and Homan, who worked in Trump's first administration to enforce immigration laws, was one of his first picks.

    Trump has said he would enact the "largest deportation operation" in US history on his first day in office and has tapped Homan to lead that effort.

  2. Trump's tariff plan 'not in line with existing free trade deal'

    Ben Hatton
    Live reporter

    Would a 25% tariff on goods coming into the US from Canada and Mexico violate a free trade agreement between the three nations, signed by Trump in 2020?

    International trade policy expert Dr Stephen Woolcock tells the BBC Trump's latest tariff proposal is "clearly not in line with the existing agreement".

    "The question is: what happens then?" he says, adding that a choice open to Mexico and Canada, to raise tariffs of their own, would not favour either nation, especially Mexico owing to its dependence on US trade.

    Dispute mechanisms for such trade agreements often take months or years, and due to the US involvement in the process it would be unlikely to find against it, he adds. "Most trade agreements are based on trust and compliance, and their effectiveness depends on parties implementing them in the spirit of the agreement."

    A similar situation with Trump threatening to change the terms of trade with Mexico and Canada occurred during his last presidency, says Dr Woolcock, who is visiting associate at the LSE international trade policy unit. It led to a renegotiation that produced the existing United States-Mexico-Canada Agreement.

    "We don't know whether the Trump administration is simply using this as negotiating leverage," Dr Woolcock adds.

  3. Some US companies in China are nervous

    Jonathan Josephs
    BBC business reporter

    There’s a sense of nervousness amongst some of the biggest American companies that operate in China over these tariffs.

    Since China opened its economy up to foreign companies at the end of the 1970s, it's been an important manufacturing hub mainly because lower wages make it cheaper to make goods there.

    The other side of that is the decline in US manufacturing jobs, something that Donald Trump recognised in his campaigning.

    Tariffs push up the costs of those goods when American consumers buy them - that can make it less attractive for foreign companies to make stuff in China.

    That investment has played an important role in China growing into the world’s second-biggest economy.

    Now the American Chamber of Commerce in China, whose members include the likes of Nike, Intel, Pfizer and Coca-Cola, says "in general, our member companies are not in favour of tariffs".

    Its president, Michael Hart, hopes that they could be just a negotiating tactic, given Trump said he specifically wants China to crack down on illegal drugs that end up in the US.

    “We won’t know for certain what President-elect Trump will do until he’s actually in office two months from now” but he adds given Donald Trump has used tariffs before this announcement "should come as no surprise" and that "many of our companies will be scenario planning accordingly".

    A woman works in the Hualida clothing factory in Changzhou, Jiangsu Province, China, 14 November 2023. The Hualida Clothing factory's main products are down jackets and functional sports and leisure tops. The products are exported to 38 countries and regions. Clothing manufacturing in China, ChangzhouEPA

  4. Trudeau calls meeting to 'talk about US'

    Justin Trudeau stands at a lectern in a suit, in front of a line of Canadian flagsGetty Images

    More now from Canada's Prime Minister Justin Trudeau, who spoke last night to Donald Trump on the phone.

    Trudeau addressed the phone call again this morning, when he spoke before a cabinet meeting in Ottawa.

    He says the pair talked about the "intense and effective" connections that exist between the US and Canada.

    The Canadian prime minister emphasised there would be cooperation within his country’s government on the topic, and said he had called a first ministers meeting “to talk about the United States” at 17:00 EST on Wednesday, the BBC has learned.

  5. Mexico says it will retaliate with its own tariffs if Trump's plan goes ahead

    Vanessa Buschschlüter
    Latin America editor, News Online

    Mexico's president Claudia SheinbaumGetty Images

    Mexican President Claudia Sheinbaum has now responded to Trump’s threat to impose 25% tariffs on goods imported from Mexico.

    In her morning news conference she read out a letter she said she would send to the US president-elect.

    In it, she tackled Trump’s remark head on that the tariffs would stay "until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country".

    Sheinbaum insisted that neither threats nor tariffs would solve the "migration phenomenon" or drug consumption in the US.

    She said that what was required instead was cooperation and mutual understanding.

    The Mexican leader also warned that should Trump go ahead with the tariffs, Mexico would retaliate by imposing its own taxes on US imports. And that, she said, would "put common enterprises at risk".

  6. Will Trump's threats materialise? Markets are unsure

    Natalie Sherman
    New York business reporter

    Trump's call to aim tariffs at America's three biggest trade partners prompted some turmoil in financial markets overnight.

    The Canadian dollar and the Mexican peso weakened, while shares in car companies - which rely on global supply chains - have also been hit.

    But markets generally appear to be taking the news in stride, as they wait to see if the threats will materialise.

    After dipping in overnight trade, the Dow Jones Industrial Average is down slightly, while the S&P 500 and Nasdaq are up.

    "The market doesn't quite know what to do," said JJ Kinahan, chief executive of the IG Group North America.

    Kinahan said he expected to see continued "back and forth" as investors try to suss out whether the policies Trump has proposed will become reality.

  7. Analysis

    Is this the opening salvo in trade wars to come?

    Anthony Zurcher
    BBC North America correspondent

    Donald Trump’s announcement that he plans to impose 25% tariffs on imports from America’s two largest trading partners, Mexico and Canada, has quickly become the dominant topic of political conversation.

    It’s a reminder of just how easily the president-elect can make headlines with a post or two on social media.

    Trump’s announcement shouldn’t come as a huge surprise, as he regularly spoke of imposing new tariffs – even on US allies – during his recent presidential campaign.

    The conditions he details, requiring America’s two neighbours to address fentanyl drug imports and immigration, is an additional twist, however.

    That the president-elect has made this announcement just under two months before he takes the oath of office suggests that there may be some room for negotiations and alterations to Trump’s plan. Trump has already spoken with Canadian leader Justin Trudeau, and new communications with Mexico are certainly in the works.

    Trump has long been a proponent of tariffs, however, and has pitched them as a means of funding the US government. If that is the case, this may be just an opening salvo in trade wars to come.

  8. Trump 'very serious' about plans to raise tariffs, former trade rep says

    Former US trade official says Trump is 'very serious' about tariffs

    The way tariffs are discussed has evolved from the time of Trump's first administration, according to a former official at the Office of the US Trade Representative.

    It was previously something talked about in back rooms, but now Trump is bringing that conversation out into the public - "tariffs are part of the common discourse," Everett Eissenstat tells BBC's New York business correspondent Michelle Fleury.

    Trump is "very serious" about his intent to raise tariffs, Eissenstat said.

    Eissenstat suggested that migrants trying to cross the US border before 20 January - when Trump comes into office - could be spurring Trump's recent tariff announcement.

    He said the policy proposal could be an effort to slow that migration down.

  9. Analysis

    Did Donald Trump just blow up his own trade deal?

    Michelle Fleury
    New York business correspondent

    Trump sits outside, in front of the White House, with his pen to a document, with the then Mexican president sitting at a desk next to hisGetty Images

    Trump, next to the then Mexican president Andres Manuel Lopez Obrador, signing a joint declaration on the USMCA in 2020

    The former president called the United States-Mexico-Canada Agreement - or USMCA - a "monumental win" when he signed it back in 2020.

    On the campaign trail this summer he sang a different tune, promising to renegotiate the deal which is up for review in 2026. So is this the opening salvo? Or something else?

    Trump’s vow to impose tariffs on Canada and Mexico could violate the terms of the agreement. That could open the door to legal challenges, and even threaten the pact itself.

    It also raises a crucial question: For countries looking to strike a free trade deal with the US, what does it say if Trump is willing to impose tariffs - even on nations the US already has agreements with?

  10. China: 'No-one will win a trade war'

    Jonathan Josephs
    Business reporter

    We now have a response from the Chinese government. It’s told the BBC that “no-one will win a trade war or a tariff war”.

    Liu Pengyu, who is a spokesman at the Chinese embassy in Washington, said something that those of us who follow global trade closely have heard many times before: “China believes that China-Us economic and trade cooperation is mutually beneficial in nature”.

    However, cooperation has been difficult to come across in recent years. The majority of what the two sides sell each other is subject to tariffs - 66.4% of US imports from China and 58.3% of Chinese imports from the US.

    That’s because President Joe Biden has kept in place all the trade restrictions that Donald Trump imposed, and added more of his own.

    When it comes to the issues of Chinese-made drugs entering the US, Liu said: “Carrying out counternarcotics cooperation is one of the important common understandings reached between President Xi and President Biden during their meeting in San Francisco in 2023”.

    It was an important meeting because it was only the second time they met face-to-face during Biden’s then nearly three years in office.

    Liu went on to say: “The Chinese side has notified the US side of the progress made in US-related law enforcement operations against narcotics. China has responded to US request for verifying clues on certain cases and taken action. All these prove that the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”

  11. Canada's PM Trudeau speaks to Trump about border

    Justin Trudeau sits in a yellow chair. To his right, Donald Trump sits and holds out his handGetty Images

    We're just hearing news that Canada's Prime Minister Justin Trudeau has spoken with Donald Trump, after the president-elect announced plans to impose tariffs when he is in the White House.

    The pair spoke by phone for about 10 minutes last night, a Canadian government official tells the BBC.

    The official says that during the call, the Canadian prime minister pointed out that the number of migrants crossing the Canadian border was much smaller compared to the US-Mexico border.

    Trump and Trudeau reportedly had a "good conversation", speaking about trade and border security, and agreed to keep in touch.

  12. BBC Verify

    What does the US import from Canada, Mexico and China?

    By Jake Horton, BBC Verify

    Donald Trump has said he wants to introduce tariffs - or taxes on imports - on three countries: Canada, Mexico and China.

    In 2023, the value of imports of goods and services from these three leading trading countries to the US was nearly $1.5tn, according to the US government’s Bureau of Economic Analysis.

    A terminal at the Port of Los Angeles, with hundreds of large multi-coloured shipping containers piled highGetty Images

    So what do they trade? In 2022, the latest year for which there is a full breakdown of the types of goods and services imported, the top import from Canada to the US was crude petroleum, valued at $117bn.

    This made up 60% of the US gross total crude oil imports.

    From China, imports of computers and broadcasting equipment came to more than $100bn.

    The top import from Mexico was also computers valued at almost $37bn.

    Imported cars from Mexico were worth more than $34bn in 2022.

  13. Analysis

    Europe and UK spared for now

    Faisal Islam
    Economics editor

    Trump is using tariffs as a weapon of diplomacy, even coercion on topics entirely unrelated to global trade.

    Are the leaders of G20 nations with their own domestic audiences really going to roll over in order to give the new president a win?

    They could choose to wait out the inevitable impact of Trump applying a 25% increase on the cost of two-fifths of US imports on US consumers and inflation.

    What is also clear is that the appointment of Scott Bessent as Treasury secretary will not temper the tariff push.

    Amid the battle for his nomination he went out of his way to acknowledge the power of tariffs as a tool that had been pioneered by Alexander Hamilton himself, the first ever US Treasury secretary.

    Earlier this year he had suggested tariffs might be used tactically, but the main tool for the US rejuvenation of manufacturing would be a cheaper dollar.

    Europe and the UK have been spared for now. But it is important to reiterate that these moves are not even the real bulk of the tariff policy outlined by Trump.

    He wants to fundamentally change the global economic map, and reduce China and Europe’s trade surplus with the US which he views as "ripping off America".

    The world is far more complicated now, however, than these binary economic relationships. The US is undoubtedly powerful enough to start rebalancing world trade. Push things too far, however, especially with G7 and G20 allies, and the US might find itself rather too isolated.

  14. Tariffs are a negotiating tactic, says ex-Federal Reserve governor

    Randall Kroszner walks along while smiling. He is wearing a grey blazer and light blue shit, and has black-rimmed glasses on. He has a badge pinned to his chest that says University of Chicago.Getty Images

    A former governor of the US Federal Reserve system says he believes US President-elect Donald Trump is using the tariffs as a "negotiating tactic".

    Randall Kroszner says Trump's made clear that until he gets "satisfaction" from China and Mexico on issues of drugs and illegal migration, he'll use tariffs "to try to make sure they do what he wants them to do".

    Kroszner also tells BBC Radio 4's Today programme that tariffs will impact the US economy far less than it would in other countries

    “Total imports in the US are only 15% of GDP, for many countries… it’s dramatically higher than that so it has a much, much bigger impact,” he told the BBC’s Today programme.

  15. The trade tariff latest - explained in five questions

    Donald Trump is on the left side of a table in front of an American flag in 2019. On the right is Chinese President Xi Jinping, in front of a Chinese flagGetty Images

    What’s a tariff? This is a tax on a product made abroad. The theory is that taxing items when they come into the country makes them more expensive, so people buy cheaper local products instead.

    What's Trump suggesting? He's planning a 25% tariff on all goods coming into the US from Mexico and Canada, and an extra 10% on top of existing tariffs on goods from China.

    How do tariffs work? It's paid by the domestic company that imports the goods, not the foreign country that exports.But Trump insists that tariffs will hit other countries, for example they may be forced to lower their prices.

    Why’s Trump doing this? Trump says the tariffs will be in place until Canada and Mexico clamp down on drugs and illegal migrants crossing the border. The China tariffs will last until it cracks down on fentanyl being smuggled out the country, he says.

    What’s a trade war? A trade war breaks out when countries try to attack each other with taxes and quotas. By making goods from other countries more expensive to import, other nations’ economies are harmed while domestic trade is boosted. The US and China had one during Trump's first term. China has today warned that "no-one will win" in another one.

  16. Analysis

    Is Trump serious about tariffs? We now have our answer

    Faisal Islam
    Economics editor

    Donald Trump side on at a lecternGetty Images

    "Is Trump serious about tariffs?" This has been the question hanging over not just world markets but the whole world economics.

    The popular wisdom had become that he wasn’t really that serious, and the key bit of evidence for that was his appointment of hedge fund investor Scott Bessent as Trump’s preferred Treasury secretary.

    The answer overnight, though, was pretty brutal. Yes, he is serious, and in the most unexpected way. By choosing to target Mexico and Canada as well as China, he is confirming threats made on the campaign trail that appeared the most fanciful.

    For starters he is willing to blow up the Mexico-Canada-America trade deal that he signed in his first term, on day one of his second term. What does a Trump free trade deal even mean now, if the new White House is willing to tariff your country?

    And specifically, the rationale for these moves is not mainly or even much about trade or economic policy. These tariffs are about getting Mexico, Canada and China to alter their policies on crackdowns over migration and illicit drugs.

  17. We must do everything to avoid a 25% tariff, says Quebec head

    Earlier, we heard Ontario's premier had said that the US imposing a 25% tariff on imported Canadian goods would be "devastating" for both American and Canadian workers.

    Now the head of Quebec - Canada's second biggest province after Ontario - says the tariff "poses an enormous risk to the Quebec and Canadian economies".

    "We must do everything possible" to avoid it, François Legault adds.

    Others have joined in with their warnings. David Eby, the premier of British Columbia, says the tariff would "hurt Canadians and Americans", adding that "Canadians must stand united".

    And Alberta's premier, Danielle Smith, calls on the federal government to "resolve" issues around concerns from Trump's incoming administration about "illegal activities at our shared border", which would avoid "any unnecessary tariffs on Canadian exports to the US".

  18. Trump's reasons for tariffs are different this time round

    Jonathan Josephs
    BBC business reporter

    In Donald Trump’s first term in office there were two prevailing reasons for using tariffs.

    With China in particular there was a big desire to cut the trade deficit - that’s the gap between the amount the US bought from China than sold.

    That deficit meant that in 2018 - the year Trump first introduced tariffs - the US bought $418bn more goods from China than went the in the other direction.

    Trump saw that as a drain on the US economy and eventually a deal for China to buy $200bn more goods was signed in January 2020. But China has struggled to live up to that commitment.

    Although the deficit has see-sawed it is now lower and last year’s figure of $279bn was the lowest since 2010.

    The other reason Trump gave for the use of tariffs in his first term was protecting American jobs. The new trade deal he agreed with Mexico and Canada may have helped but it's more difficult to quantify the impact.

    Neither deficits nor jobs were mentioned in his post about his plans for new tariffs in January.

  19. US dollar climbs, Europe stocks fall

    Nick Edser
    Business reporter

    Donald Trump’s comments on tariffs sent a ripple through currency markets as traders scrambled to get to grips with the move.

    Initially, the US dollar jumped in value against the currencies of those countries being targeted. It rose more than 2% against the Mexican peso and hit the highest level for four and a half years against the Canadian dollar.

    The US dollar also strengthened against other currencies, although it has since lost some of the earlier gains, and share prices in Europe fell as investors worried about the potential impact.

  20. Analysis

    Trump appears to be a man in a hurry

    Sarah Smith
    North America editor

    People were never quite sure whether Trump actually meant literally the things he was saying in the campaign - if that’s really what he would do.

    On this, he certainly seems to be making good on his campaign promises, and in a hurry as well.

    He has said very clearly that he plans to do this on day one. So this is not going to be the culmination of a negotiation with these countries to impose a tariff, he wants to do this from as early as he possibly can.

    And I suspect you might see this with some other policies as well - that he is a man in a hurry who wants to start imposing his agenda just as quickly as he can.