Mexico and Canada are heavily dependent on the US market. Last year, more than 83% of exports from Mexico went to the US, and 75% of Canadian exports went to the country

President-elect Donald Trump threatened Mexico, Canada and China with tariffs on all imports on Monday, a move that could disrupt global supply chains, increase consumer prices, and start another trade war.

Mexico and Canada will see 25% tariffs on all goods if they don’t stop migrants from crossing the US border and curb drug trafficking into the US.

Trump also vowed an additional tariff of 10% on China for its failure to regulate the chemicals that are used in fentanyl. These tariffs add to existing 15% levies from the 2018 trade war.

In response, the Mexican peso and Canadian dollar fell 1.4% and 1%, respectively. The Chinese yuan dropped 0.3%, reflecting market concerns that increased tariffs could strain US-China trade, pushing up prices in the automotive and metals sectors.

Until the issues are addressed, the tariffs will remain in place.

Mexico and Canada are heavily dependent on the US market. Last year, more than 83% of exports from Mexico went to the US, and 75% of Canadian exports went to the country.

Response
Mexico and Canada warned the tariffs would kill jobs and hinted at retaliation, with potential tariffs on US goods, including vehicles and agricultural products. Meanwhile, China has said that tariffs on America’s three largest trading partners could upend the economies of all four countries.

Products that could see an impact
US automakers, dependent on supply chains in Mexico and Canada, could be especially affected. Roughly 16% of all the vehicles that will be sold in the US this year will have been manufactured in Mexico. Canada will account for approximately 7% of US vehicle sales.

Consumers may face rising prices for gas, auto parts, meat, and fresh produce. Mexico is the largest exporter of avocados, tomatoes, and strawberries to the US.

Canada and Mexico supply nearly $86 billion in agricultural products to the US annually.

If enacted, the move could also impact US imports of Mexican tequila, beer, and Canadian fertilizer.

Additionally, livestock imports, such as cattle and hogs, could face delays, further affecting meat prices.