WASHINGTON (AP) — President Donald Trump said Monday that he expects to impose 25% tariffs on Canada and Mexico starting Feb. 1, but declined to specify his plans to tax Chinese imports.
Trump made the announcement in response to reporters’ questions as he signed the executive orders in the Oval Office on his first day in the White House.
Trump threatened tariffs of up to 60% against China during the campaign, but appeared to soften his plans after a phone call with Chinese President Xi Jinping last week. He said on Monday there would be further talks with his counterpart in the world’s second-largest economy.
“We will have meetings and phone calls with President Xi,” Trump said.
Trump believes his actions can lower energy prices and curb inflation and that tariffs will strengthen the economy rather than subject consumers to higher prices. But it’s unclear whether his orders will be enough to stimulate the growing economy with lower prices he promised voters.
Trump particularly blamed inflation on the $1.9 trillion in pandemic aid provided by then-President Joe Biden in 2021, saying his predecessor’s policies restricted oil production even as domestic production reached near record levels.
“The inflation crisis was caused by massive overspending,” Trump said in his inaugural address.
Monday’s orders included opening Alaska’s Arctic National Wildlife Refuge to oil drilling and easing regulatory burdens on oil and natural gas production. He also declared a national energy emergency in hopes of boosting electricity production as China competes to develop technologies such as artificial intelligence based on data centers that consume enormous amounts of energy.
Trump also signed an order requiring federal agencies to spend 30 days examining how they can support reduce the cost of housing, health care, food, energy and appliances and find ways to integrate more people into the workforce .
Another measure he signed would keep the social media platform TikTok open for 75 days so it can find a U.S. buyer, rather than shutting it down.
Trump also signed a measure requiring federal agencies to study trade policy and advise the Treasury and Commerce departments on how to create an External Revenue Service to collect tariffs and tariffs related to trade. The measure set a series of April deadlines.
Nevertheless, Trump wanted to make it clear in his speeches on Monday that he was committed to raising taxes on imports.
Trump promised to impose tariffs in his inaugural address and said foreign countries would pay the trade penalties, although these taxes are currently paid by domestic importers and often passed on to consumers. Trump said later Monday that the tariffs would “make us rich as hell.”
A senior Canadian government official said it is prepared for almost all possibilities regarding the status of trade with the United States.
(*1*) said Canadian Finance Minister Dominic LeBlanc. “Mr. Trump was unpredictable in a previous term, so it is our job to ensure we are prepared for any scenario.”
Overall, the Republican faces a number of challenges in achieving his ambitions to lower prices. Biden managed to keep the inflation rate falling for two years, but when he left office, price growth was still outpacing wages over the past four years.
A major driver of inflation is the ongoing housing shortage, and U.S. oil production is already at record levels, with producers facing uncertainty about global demand this year. The Federal Reserve is technically the government agency tasked with keeping inflation at an annual target of about 2%. In addition to bond purchases and public communication, their usual levers include setting short-term interest rates for banks that lend to each other.
Trump said producing natural resources is key to reducing costs for American consumers, both at the pump and in their electric bills.
Energy prices shape every part of the economy, so increasing U.S. production of oil, natural gas and other fossil fuels is critical to national security. Trump, who has vowed to restore U.S. “energy dominance,” has complained that the Biden administration has restricted Alaska’s oil and gas production.
Trump showed his relative indifference to the fossil fuels that accelerate climate change, even as he lamented natural disasters like the Los Angeles wildfires. He said he would again withdraw the United States from the landmark Paris climate accord, dealing a blow to efforts to combat global warming and once again distancing the U.S. from its closest allies.
Energy can impact prices, but it does not represent the majority of families’ spending. According to the weights for the Consumer Price Index, energy spending on average only accounts for 6% of spending, much less than food (13%) or shelter (37%).
Inflation that had been dormant for decades resurfaced in early 2021 as the economy recovered from the COVID-19 lockdowns with unexpected strength. A surge in customer orders overwhelmed American supply chains, causing delays, shortages and higher prices. Factories making computer chips, furniture and other products around the world have struggled to recover.
Republican lawmakers quickly blamed the Biden administration’s $1.9 trillion pandemic relief, although inflation was a global phenomenon that points to factors beyond U.S. policy. Inflation worsened further after Russia invaded Ukraine in February 2022, driving up energy and food prices.
In response, the Fed raised its key interest rate eleven times in 2022 and 2023. Inflation has fallen from a four-decade high of 9.1% in mid-2022. But inflation has risen since September, reaching an annual rate of 2.9% in December.
Voters were unimpressed with progress in fighting inflation and frustrated that prices were still more than 20% higher than four years ago, while average weekly earnings failed to keep up. Higher food prices were particularly painful – a 27% augment from February 2021.
After the inaugural address, Trump downplayed the importance of inflation in the 2024 election, suggesting in his remarks at the Capitol that his voters cared more about immigration because there were confined opportunities to talk about prices.
“How many times can you say the price of an apple has doubled?” Trump said.
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Associate Press writer Rob Gillies in Toronto contributed to this report.
