Trump’s Tarrifs. Mexico Threatens Retaliation And In A First China State Media Praises Some US Firms. The Bigger Question, Will Trump Relent?

President-elect Donald Trump is making global headlines with his bold move-starting January 20, his first day in office, he plans to impose a 25% tariff on all goods from Mexico and Canada, America’s largest trading partners, and a 10% tariff on Chinese imports. This move has already sparked strong reactions.

Mexican President Claudia Sheinbaum didn’t hold back on Wednesday, warning that Mexico will retaliate if Trump follows through. Her government estimates that such tariffs could cost 400,000 U.S. jobs and push up prices for American consumers. “If the U.S. imposes tariffs, Mexico will respond in kind,” Sheinbaum said during a press conference, making it clear that Mexico is ready to protect its interests.

Economy Minister Marcelo Ebrard, standing beside Sheinbaum, advocated for regional cooperation over a tariff war. “It’s like shooting yourself in the foot,” he said, pointing out that the proposed tariffs could violate the USMCA trade agreement between the U.S., Mexico, and Canada.

Ebrard warned that these tariffs would hurt U.S. companies manufacturing in Mexico, leading to job losses and slower economic growth. “The impact on businesses is enormous,” he emphasized.

The automotive industry, in particular, could be hit hard. Ford, General Motors, and Stellantis—all key players in cross-border manufacturing—would feel the squeeze. Ebrard highlighted that 88% of pickup trucks sold in the U.S. are made in Mexico. “These trucks, which are popular in rural areas that voted heavily for Trump, could see a price hike of about $3,000,” he said.

The Phone Call

Later on Wednesday, Sheinbaum and Trump had a phone conversation, focusing on Trump’s top priorities. Trump stated on his Truth Social platform that Sheinbaum agreed to curb migration through Mexico, effectively “closing the Southern Border.” He called the discussion “very productive.”

Sheinbaum, however, offered a different perspective on X (formerly Twitter). She outlined Mexico’s strategy to manage migration before it reaches the U.S.-Mexico border, emphasizing, “Mexico’s approach isn’t about closing borders, but building bridges between governments and people.”

Interestingly, after the phone call, the Mexican peso gained nearly 1% against the dollar, recovering from earlier losses.
Analysts are speculating that Trump’s tariff threats may be more of a negotiating ploy than a fixed trade policy. David Kohl, chief economist at Julius Baer, commented, “It seems this is less about trade and more about using tariffs as leverage for broader political goals.”

Mega Stakes

Mexico’s automotive industry, the backbone of its manufacturing sector, is heavily reliant on exports to the U.S., accounting for nearly 25% of North America’s total vehicle production. But with President-elect Donald Trump’s proposed tariffs looming, the future looks shaky.

Barclays analysts issued a stark warning on Tuesday, predicting that the 25% tariff could “effectively wipe out all profits” for Detroit’s Big Three automakers—Ford, GM, and Stellantis. “While it’s widely acknowledged that such a blanket tariff would be disruptive, investors may not fully grasp just how devastating it could be,” the analysts noted.

Trump’s transition team, however, sees things differently. Brian Hughes, a spokesperson, defended the move, saying it’s about protecting U.S. manufacturers and workers from “unfair practices by foreign companies and markets.” According to Hughes, Trump’s policies aim to make life more affordable and prosperous for Americans.

While GM and Stellantis stayed silent on the issue, Ford avoided commenting on the tariff’s impact but highlighted that it produces more vehicles in the U.S. than most other major automakers.

Meanwhile, Mexico’s automotive industry group, AMIA, is taking a wait-and-see approach, preparing for any potential fallout. Across the border, the Institute of International Finance (IIF) sounded the alarm, warning that the tariffs could trigger a wave of protectionism, affecting exchange rates and commodity prices, with broader regional implications.

Looking ahead, the USMCA trade agreement—covering the U.S., Mexico, and Canada—is due for review in 2026. Katia Goya, director of international economics at Grupo Financiero Banorte, believes a full renegotiation of the pact is more likely than simply extending it. “A trade conflict would slow U.S. economic growth, increase unemployment, and push inflation higher,” she explained.

Economy Minister Marcelo Ebrard also put forth the stakes, noting that USMCA trade reached $1.78 trillion in the first nine months of the year. “We can either fragment our region with tariffs or strengthen it through cooperation,” Ebrard said. “Mexico is choosing unity over division.”

China’s Unprecedented Move

Even as the tariff talks gain more traction, in a rare occurrence, China’s state media praised certain American companies, outlining “strong collaboration” with Chinese partners.

On Monday, Trump announced had announced plans to impose a 10% tariff on Chinese goods, citing Beijing’s failure to curb the export of chemicals fueling America’s opioid crisis. He had previously also hinted at tariffs exceeding 60% on Chinese imports, a threat that has lingered since his campaign.

During Trump’s first term, corporate executives and investors closely monitored Chinese state media for hints about which U.S. companies were in Beijing’s favor and late Wednesday, the state-run Global Times praised Apple, Tesla, and Starbucks for their cooperation with local Chinese partners.

“U.S. politicians should respect the clear desire of American businesses for economic and trade collaboration by creating favorable policy environments,” the paper urged.

Meanwhile, the China Daily pointed to Morgan Stanley’s recent regulatory approval to expand in China as evidence of foreign investors’ enthusiasm. However, despite Trump’s tariff announcement, Chinese officials have remained publicly silent. A Chinese embassy official in Washington did, however, state that “no one wins in a trade war.”

According to a September survey by the American Chamber of Commerce in Shanghai, only 47% of U.S. firms are optimistic about their five-year outlook in China—a sharp decline from previous years.

In another surprising development, China has released U.S. citizens Mark Swidan, Kai Li, and John Leung, resolving long-standing diplomatic tensions. The National Security Council confirmed that all Americans deemed “wrongfully detained” in China are now free. This came alongside a long-sought upgrade to the U.S. travel advisory for China, signaling a potential diplomatic shift.

Canada’s Response “No One Wants a War”

Meanwhile, in Ottawa, Canadian Prime Minister Justin Trudeau addressed Parliament, urging calm amid rising trade tensions with the U.S. “The idea of going to war with the United States isn’t what anyone wants,” Trudeau said. “Let’s approach this seriously and methodically—no panic.”

However, provincial leaders are preparing for a potential showdown. Deputy Prime Minister Chrystia Freeland emphasized Canada’s leverage: “We sell the U.S. vital resources—oil, electricity, critical minerals, and metals.”

Ontario Premier Doug Ford didn’t mince words, calling Trump’s proposed tariffs “devastating” for workers on both sides of the border. “To compare us to Mexico is the most insulting thing I’ve ever heard,” he said, a sentiment echoed by premiers from Quebec, Saskatchewan, and British Columbia. Alberta Premier Danielle Smith acknowledged Trump’s “valid concerns” about border security but warned of the economic fallout.

Financial markets are already reacting. The Canadian dollar, or Loonie, has dropped below 71 U.S. cents—the lowest since May 2020, when Trump first threatened tariffs on Canadian goods. The Mexican peso also hit its lowest value this year, trading at around 4.8 cents.

The Bigger Question, Will Trump Relent?

As Donald Trump prepares to take the reins once again, his latest promise to impose tariffs on China and Mexico unless they stem the flow of fentanyl and migrants has sparked a heated debate. Bold? Yes. Risky? Certainly. But will it work? That’s the million-dollar question.

For those unfamiliar, fentanyl is the synthetic opioid wreaking havoc across the U.S., causing nearly 75,000 overdose deaths in 2023 alone. It’s the leading cause of death for Americans aged 18 to 45—trumping car accidents, gun violence, and even COVID-19.

Trump’s proposed approach is tougher than Biden’s measured diplomatic efforts. Biden spent the past year building bridges with Beijing, resulting in some modest progress. But Trump, true to form, is opting for a more forceful stance. “We need bold action,” says Paul Martin, CEO of United Against Fentanyl. He sees the crisis as both a public health and national security threat. “Whether these measures work or not, we must do something,” Martin adds.

Tariffs as a Tactic
The plan hinges on hitting China and Mexico where it hurts—trade. Fentanyl’s chemical precursors mostly originate in China and make their way to Mexico, where cartels manufacture and smuggle the drug into the U.S. Experts argue that raising the cost of this illicit business through tariffs could disrupt the supply chain.

Ray Donovan, former DEA chief of operations, believes this approach could be effective. “One way to impact an illicit economy is to increase the cost of doing business,” he notes. “Finally, the Trump administration is saying, ‘Enough is enough.’”

But not everyone is convinced. Vanda Felbab-Brown from the Brookings Institution warns that tariffs might backfire, particularly with China.

A trade war could derail ongoing cooperation on drug enforcement. However, she acknowledges the power of the threat itself. “The prospect of further tariffs could induce more cooperation, but it’s a delicate dance. Neither China nor Trump wants to appear as though they’re backing down.”

Margaret Williams, an addiction specialist, argues that while tariffs might slow the supply, they won’t solve the addiction crisis. “We need policies that increase access to treatment like methadone and buprenorphine,” she says. These drugs are proven to combat opioid addiction but remain heavily regulated. Williams also emphasizes the need to address deeper issues like untreated mental health disorders and socio-economic factors fueling addiction.

The Last Bit

Trump’s strategy might shake things up, but whether it’s the shake-up America needs is debatable.

Can tariffs really force two sovereign nations to play ball? Or will they trigger a trade war with far-reaching consequences?

Whether Trump’s approach will lead to meaningful change or unintended chaos remains to be seen but for now, the world watches and waits—asking the bigger question – Will Trump relent, or will his hardline strategy set the stage for a new global showdown?