(TNND) — The promise of new tariffs on America’s neighbors from President-Elect Donald Trump has world leaders and businesses trying to predict the potential fallout.
It’s unknown right now if Trump will go through with the threat, or just use it as a bargaining chip.
Trump’s promise to levy new tariffs on China, Mexico, and Canada already has the world leaders talking to avoid a trade war.
Trump threatened new 25% tariffs on goods from Mexico and Canada as a penalty until fentanyl drug flow and illegal immigration are curbed. President Joe Biden says taxing America’s neighbors is a bad idea.
“I hope he rethinks them. I think it’s a counterproductive thing to do,” President Biden said while speaking to reporters at a Thanksgiving event in Nantucket, Mass.
Trump and Mexico’s President Claudia Sheinbaum have been going back and forth this week on tariffs, including a phone call on Wednesday.
Trump called the phone call “wonderful” and claimed on Truth Social Sheinbaum “has agreed to stop Migration through Mexico, and into the United States, effectively closing our Southern Border.”
While Mexico’s President said the call was “excellent” – she also pushed back on a closed border – with a post on X reading “We reaffirm that Mexico’s stance is not to close borders but to build bridges between governments and peoples.”
Experts say the tariff threat could just be a strategy to renegotiate trade deals.
“Probably a bargaining tool, but you never know with Donald Trump, right,” said former White House economic advisor Steve Moore.
“China and Mexico are both complicit with the entry of these drugs into the United States, and Trump is simply saying you have to do a better job keeping these drugs out of our country.”
There’s also a fear that tariffs on imports will raise prices for American companies and consumers, including in the auto industry.
Car manufacturers rely on both of America’s neighbors for parts and labor. Rep. Debbie Dingell, D-Michigan, says she’s willing to work with Trump on trade, but is worried about how “day one” tariffs might impact her state’s biggest industry.
“I hope it is not an intent to either hurt the domestic auto industry or the consumer. so I hope he’ll take the time to understand the impact. I’ll work with him on trade. let’s do it right,” she said.
Mexico’s President told Trump there was already a campaign underway in her country to reduce fentanyl consumption, as well as efforts to stop migrant caravans from reaching the border.
She told reporters Thursday there would be no tariff war with the US.