Politicians, Canada and Mexico React to Trump's 25% Tariff Threat

Sen. Chuck Grassley, R-Iowa, on a weekly call he hosts was asked repeatedly by reporters what these tariffs would mean for U.S. agricultural producers, whether it's feedlots that accept calves from Mexico, U.S. slaughterhouses taking cattle from Canada, retaliation against corn or other exports.

Grassley said, "He’s using it as pressure. You know, it worked with China, he did sign an agreement they were supposed to buy from the United States ... . It actually worked as a negotiating tool. We’ll have to wait and see what the negotiations bring about."

Trump in 2019 threatened to put 5% tariffs on Mexican imports, escalating 5 percentage points each month, over the same issues as this time -- migration and drug trafficking. He ended up saying he was satisfied with Mexican enforcement initiatives, and didn't impose the tariffs.

In response to a question from International Trade Today, Grassley said he didn't think the tariffs threat would end up "having any impact, in the final analysis, because I think Canada has more to lose than we do, same with Mexico, and they’ll control their borders."

Canada is already beginning efforts to convince Trump that it's not a migration or drug trafficking threat and that the free-trade deal is beneficial to both countries. Canadian newspapers reported that Prime Minister Justin Trudeau called Trump after his announcement Monday night about the tariffs, and that Trudeau talked about the intense commercial connections between the U.S. and Canada. "We talked about some of the challenges that we can work on together," the Canadian leader told reporters on his way into his Cabinet meeting in Ottawa. "It was a good call. This is something we can do, laying out the facts in constructive ways. This is a relationship we know takes a certain amount of working on and that's what we'll do."

A joint statement from Deputy Prime Minister Chrystia Freeland and Minister of Public Safety Dominic LeBlanc said "Canada places the highest priority on border security and the integrity of our shared border."

They also said that the trade relationship is balanced -- however, the goods trade deficit is substantially bigger than it was in the first Trump term, with Canada exporting $64.3 billion more in goods than it imported in 2023, according to U.S. Census data. In 2019, it was less than $26 billion.

"Canada buys more from the U.S. than China, Japan, France and the UK combined," the two Canadian leaders noted.

Ontario is the heart of Canadian automaking, the manufactured goods sector that would be most affected by tariff hikes. The province's premier, Doug Ford, tweeted, "A 25 per cent tariff would be devastating to workers and jobs in both Canada and the U.S. The federal government needs to take the situation at our border seriously."

In a letter to the president-elect, Mexican President Claudia Sheinbaum wrote, "President Trump, it's not with threats, nor with tariffs that migration and drug use in the U.S. will be handled. It requires cooperation and listening to each other with these big challenges."

"One tariff will come in response to another until we put shared companies at risk. It's not acceptable and would cause inflation and job losses in Mexico and the U.S."

She also told him, "You're probably not aware that Mexico has developed a comprehensive policy addressing migrants from various places in the world who cross our territory whose destination is the U.S. border." She said the number of migrant encounters that CBP has at the southern border has fallen 75% from December 2023 to November 2024, and that CBP grants appointments through the CBP One app, so there are no more caravans.

"Even so, it's clear that we need to work together on another model of labor mobility that is necessary for your country, and we need to respond to the causes that lead families to leave their homes by necessity. If a percentage of the U.S. funds dedicated to war was dedicated to peace and development, that would take care of the root causes of migration."

On drugs, she told him that 70% of the guns seized from criminals in Mexico were produced in the U.S., and that Mexico's homicides "are coming from the demand for drugs in your country." She said Mexicans "don't consume synthetic drugs," but sadly, it's Mexicans who suffer from the drug trade.

Two senior Democrats on the House Ways and Means Committee, Suzan DelBene of Washington and Don Beyer of Virginia issued statements criticizing the inflationary effects of the tariffs. DelBene tweeted: "These tariffs would be taxes paid by AMERICAN businesses & passed onto AMERICAN consumers through higher prices. They would cost families thousands a year. I recently introduced legislation to ensure a president cannot impose sweeping tariffs this way without Congress’ approval."

Beyer, co-sponsor of that bill, said, "President-elect Trump just announced that his first act after being sworn into office will be to raise prices for the American people. Despite his campaign promises and statements to the contrary, Trump’s proposed 25% tariffs on imported goods are taxes that American consumers will have to pay, on everything from fresh produce to automobiles that are assembled in the U.S. that have Canadian or Mexican components.

"No one wins a trade war. If imposed, these tariffs will lead to retaliation by both Canada and Mexico, two of our biggest trade partners, which would throw our deeply integrated economies into chaos and potentially lead us into a recession."

American Enterprise Institute senior fellow Derek Scissors wrote that it doesn't make sense to tariff Mexico and China at once -- Trump also announced he intended to hike tariffs on Chinese goods by 10 percentage points -- given that U.S. firms have substituted Mexican goods for what they used to buy from China. If both are targeted, inflation risk is much higher, Scissors said. AEI is a right-of-center think tank.

"In 2017, the year before China tariffs began to be implemented, goods imports from China stood at $505 billion," he wrote. "Those from Mexico were $313 billion." Last year, it was $475 billion from Mexico and $427 million from China, he said, and he said it's not transshipment of Chinese goods.

"It seems reasonable to retaliate against Mexican lack of cooperation on illegal migration, but there are two serious risks. First, American tariffs would cost Mexican jobs, leading to more migration," he said.