Trump threatens tariffs to gain leverage over Canada and Mexico

In the days following Donald Trump's election victory in 2024, he laid out a plan focused on imposing significant tariffs, threatening rates up to 200 percent on vehicle imports from Mexico and 25 percent on other goods from both Canada and Mexico. These threats appear strategically timed to gain leverage in upcoming negotiations regarding the United States-Mexico-Canada Agreement (USMCA), which is set for review in mid-2026. However, there are concerns about the incompatibility of such unilateral tariff increases with USMCA and World Trade Organization rules, especially given the minimal impact of Canadian borders on illegal migration and fentanyl trafficking into the U.S. Trump's approach likely stems from a longstanding belief that tariffs can effectively reduce trade deficits and bolster domestic manufacturing, a sentiment echoed by various analysts. This strategy may be less about enforcing strict trade regulations and more about a high-stakes negotiation tactic, as the U.S. relies heavily on imports from both Canada and Mexico, making the threats a double-edged sword for the American economy. The idea is to exert pressure on both neighbors to come back to the bargaining table while reigniting Republican support among workers and industries influenced by such tariffs. Nonetheless, the outcome of these threats raises questions on how they will affect the global supply chain, particularly for electronics and vehicles, which could see significant price increases due to these proposed tariffs. Trump's unpredictability in economic policies also poses challenges to trade relations, especially with China, which has become a focal point in his administration's trade strategy.