Trump's New Tariffs on Canada, Mexico, and China: Is India Next?

US President-elect Donald Trump announced plans to impose heavy tariffs on Canada, Mexico, and China as one of his first actions after taking office on January 26. Posting on his Truth Social platform, Trump proposed a 25% tariff on all goods from Canada and Mexico and a 10% tariff on imports from China. 

Trump claimed that taking these measures is necessary to address illegal immigration and the drug trade.

Invasion on US Borders

Trump described the illegal immigration and the drug trade at the borders as an "invasion" and said the tariffs would remain in place until the issues were resolved. While similar to actions during his first term, these new tariffs could have a wider economic impact, potentially increasing prices for everyday items like cars and groceries in the US.

Share Market Reaction

Following Trump's declaration, the benchmark indexes Sensex and Nifty saw a two-day surge come to an end and closed down on Tuesday, reflecting dismal global market trends as the US President-elect raised fears about tariff threats. 

Trump's declaration also caused a significant decrease in the Mexican peso, the Canadian currency, and Asian stocks, among other global markets. Australia's dollar declined, and Japan's Nikkei fell 1.4%.

How Will This Affect India?

Donald Trump, who has called Prime Minister Narendra Modi "a friend" and visited India during his first term, has often criticized India’s trade practices. He referred to India as a “tariff king,” accusing it of imposing high duties on US goods.

During a rally before his re-election, Trump praised Modi as a great leader but pointed out India’s high tariffs, saying, "India charges a lot. We have a good relationship, especially with Modi, who has done a great job."

In his first term, Trump imposed higher tariffs on Indian steel and aluminum, which led India to retaliate with duties on US products like almonds and apples. Trade experts warn that similar trade tensions could arise again if Trump targets India with his policies.

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