President Trump said Monday evening that he planned to impose a 25 percent tariff on products from Canada and Mexico on Feb. 1 and may impose tariffs on most U.S. imports as he signed an executive order directing federal agencies ordered to conduct an in-depth review of US imports. trade policy by this spring.
Speaking to reporters from the Oval Office on Monday evening, Mr Trump said he was considering imposing tariffs on Mexican and Canadian products because those countries were allowing “large numbers of people to come in and bring in fentanyl.” Asked when he might implement it, Mr. Trump said: “I think we will do that on February 1.”
Mr Trump also said he could “potentially” impose a universal tariff on all imports, saying that “essentially all countries benefit from the US”
The comments renewed the threat of an impending trade war, just hours after such an outcome appeared to fade. Mr. Trump signed an executive order on Monday directing several agencies to study a wide range of trade issues with an eye on future tariffs, but he did not immediately impose new duties as he had previously threatened.
Still, the executive order could trigger a series of major trade actions in the coming months. The order directed Trump officials to turn over reports to him, usually by April 1, assessing unfair trade practices, currency manipulation, U.S. technology controls and discriminatory foreign taxes.
It directed U.S. officials to investigate migrant and drug flows from Canada, China and Mexico into the United States, and compliance by those three countries and others with their existing trade agreements with the United States.
The executive order also called on officials to investigate the causes of large and persistent trade deficits and “recommend appropriate measures, such as a global additional tariff or other policies, to address such deficits.”
Mr. Trump's order also followed his recent comments to create an agency he has called the External Revenue Service to collect tariffs. It asked officials to “examine the feasibility of establishing and recommending the best methods for designing, constructing and implementing” the External Tax Authority to collect rates and levies from foreign sources. Tariffs and other import duties are currently being collected by Customs and Border Protection.
U.S. officials will also spend the coming months identifying countries with which the United States could reach new trade deals and conducting a full review of the U.S. industrial and industrial base to assess whether further national security-related tariffs are warranted.
In his inauguration speech on Monday, Mr. Trump said he would “immediately begin overhauling our trade system to protect American workers and families.”
“The American dream will soon return and flourish like never before,” he added.
Mr. Trump's advisers say he is more convinced than ever that tariffs can be used to great advantage. The executive order will increase the president's ability to impose tariffs on a host of targets if he so chooses, measures that could still disrupt international supply chains and spark global trade wars.
People familiar with the plans said the president and his advisers favor a combination of trade policies, as he proposed during his campaign. These include a universal tariff on foreign products, a higher tariff on China and separate measures that could improve trade relations with Mexico and Canada by imposing taxes on those countries as well.
By ordering investigations into a variety of trade topics, Mr. Trump can strengthen the legal rationale that will help his tariffs survive lawsuits, while also giving some of his top trade officials time to be confirmed by the Senate, analysts said.
Mr. Trump has praised tariffs for their ability to help American factories, generate revenue to help pay for the tax cuts he hopes to implement and generally serve as a source of pressure in negotiations with foreign countries.
Although the management of trade is technically the domain of Congress, several trade laws have given the president broad powers to issue tariffs. The president can use them to defend U.S. national security, combat unfair trade practices, and deal with various types of international emergencies.
Mr. Trump and his advisers continue to debate the best method to issue their tariffs, but they believe they have the legal authority to use them, people familiar with the deliberations said.
Mr. Trump said on social media in November that he would impose tariffs on Canada and Mexico on his first day as president. In response, the Canadian and Mexican governments have tried to mollify Mr. Trump and fend off tariffs. They have arranged meetings with the president and his advisers and reassured him about the measures they are taking to secure their borders.
Yet both governments have also warned that they will respond to any tariffs with their own sanctions. Canada has said it plans to retaliate with tariffs and other trade restrictions if Mr. Trump goes ahead with his plan, and Mexico has also threatened its own tariffs on U.S. exports.
“Our country is absolutely prepared to respond to any of these scenarios,” Dominic LeBlanc, Canada's finance minister, said Monday evening. “We continue to believe that it would be a mistake for the U.S. government to continue to impose tariffs.”
During his first term, Trump upended the country's global trade relations by imposing tariffs on foreign washing machines, solar panels, metals and a variety of products from China. These measures nearly doubled the average tariff applied to imported goods, although U.S. tariffs remained relatively low by international standards.
Some American manufacturers credit the tariffs that Mr. Trump imposed during his first term — and which President Joseph R. Biden Jr. kept in place — for helping their companies survive amid fierce competition from countries like China.
But economists and other companies argue that tariffs could also cause economic damage, by raising costs for households and businesses that rely on imported products and by spurring retaliation from other governments that could hurt U.S. exports.
Lydia Cox, an economist at the University of Wisconsin-Madison, described tariffs as “a pretty blunt instrument” last week in an online forum hosted by the Harvard Kennedy School. Tariffs offer some potential benefits to protected industries, she said, “but they cause a lot of collateral damage along the way.”
Matina Stevis-Gridneff contributed reporting from Toronto.
