President Donald Trump said he would not slap fresh tariffs on Canada and Mexico on his first day in office.
However, Trump warned that a 25% trade tariff could come as soon as February 1.
Speaking at the White House after his inauguration Monday night, Trump accused both countries of allowing illegal drugs and “vast numbers of people” to enter the United States.
“We’re thinking in terms of 25% on Mexico and Canada because they’re allowing vast numbers of people, Canada is a very bad abuser also, and fentanyl to come in,” said Trump while signing his first executive orders.
Earlier reports suggested Trump would delay any major tariff action and instead direct federal agencies to probe and investigate unfair trade practices.
However, Trump confirmed his plan to “overhaul” the U.S. trade system by taxing foreign countries to boost American wealth by using an External Revenue Service to collect tariffs and duties from foreign countries.
Finance Minister Dominic LeBlanc said Canada is prepared for any sudden moves by the new Trump administration.
“One thing we’ve learned is that President Trump, at moments, can be unpredictable,” said LeBlanc.
“We have spent the last number of weeks preparing potential response scenarios for the Government of Canada in partnership with provinces, business leaders, and unions. So our country is absolutely ready.”
Foreign Affairs Minister Melanie Joly warned that a 25% tariff would spark “the biggest trade war between Canada and the U.S. in decades.”
Trump has also threatened tariffs of 10% on global imports and 60% on Chinese goods.
Reuters reported that Trump’s orders would direct agencies to assess China’s compliance with its 2020 trade pact and review the U.S.-Mexico-Canada Agreement (USMCA).
The U.S. government has not said whether retaliatory measures by Canada or Mexico could alter Trump’s February 1 timeline.