Tariffs for Mexico and Canada taking shape for Feb. 1

President Donald Trump signaled early plans to use tariffs on imported goods as a key weapon in relations with the United States’ three top trading partners, saying the first new taxes on foreign products could be announced Feb. 1.

Trump told reporters Monday night that he is considering putting 25% tariffs on Mexican and Canadian goods “because they’re allowing vast numbers of people and fentanyl to come in” to the United States.

An announcement could come Feb. 1, Trump said, without detailing when the new taxes would take effect. The Oval Office remarks reiterated a threat the president first levied in late November after winning the election, and raised the prospect of boosting U.S. consumer prices even as the Federal Reserve struggles to vanquish inflation.

In extended comments while signing a raft of executive actions, Trump also threatened to impose tariffs on China, the European Union and BRICS, an informal group of 10 developing nations that includes Russia. He cited Beijing’s stance on a potential deal over the social media site TikTok, European reluctance to buy American cars and BRICS’ alleged desire to “do a number on the United States,” an apparent reference to the bloc’s long-term goal of decreasing its use of the U.S. dollar in trade.

Targeting so many trading partners for so many different reasons underscored the president’s intention to use tariffs, which are a tax on foreign goods, as an all-pursue tool of international economic policy and as an increasingly vital source of government revenue. Last year, the federal government collected about $85 billion in tariffs from American importers, less than 3 % of total federal tax revenue.

“We’re going to make a lot of money from tariffs,” Trump said.

Earlier Monday, the president issued an executive order requiring several studies of U.S. trade policy, including investigating the cause of “large and persistent annual trade deficits in goods,” recommendations for establishing a better system for collecting tariff revenue, and “any unfair trade practices” by other nations.

The reports from the secretaries of commerce and treasury and the chief trade negotiator are due April 1.

The United States might impose “tariffs of 25, 30, 40, 50 %, even 100%” on Chinese goods if Beijing balks at a potential resolution of U.S. concerns over TikTok’s Chinese ownership, Trump said.

The president also criticized the EU for running a trade surplus with the United States, which is likely to top $230 billion for 2024 when final figures become available.

“We’ll straighten that out with either tariffs, or they have to buy our oil. The one thing they can do, our oil, I guess the one thing they can do to catch up quickly: Buy our oil and gas, and they should do that,” he said.

Monday’s whirlwind of presidential activity was a reminder that tariffs are a favored tool for Trump, and one that he is willing to employ far more frequently than other presidents have for nearly a century.

Monday’s abrupt upheaval in the commercial environment was familiar for businesses that navigated Trump’s first-term trade wars.

“There’s just a lot of uncertainty right now about when, whether and for how long tariffs would come into play against Mexico or anyone else,” said Jake Colvin, president of the National Foreign Trade Council, which represents companies such as Caterpillar, Ford and UPS.

Trump is inclined to impose tariffs on Mexican and Canadian products at least temporarily to win concessions from U.S. neighbors over border control, according to one executive who spoke on the condition of anonymity to speak freely.

In theory, the president could invoke emergency powers to impose the new levies as soon as Feb. 1. But a slower process is more likely.

“He could do it that day. But historically, the fastest that people have moved is to give 15 to 30 days’ notice,” said John Veroneau, a partner at Covington & Burling and a former U.S. trade negotiator.

Financial markets took the president’s comments in stride. The Dow Jones Industrial Average rose by less than 1 % in midmorning trading Tuesday.

On Wall Street, the conventional wisdom is that Trump will not follow through with his most extreme plans for high tariffs on Chinese goods and a universal levy on all $3 trillion worth of foreign-made products that enter the United States each year.

Trump has insisted that he intends to follow through with those plans, which suggests potential trouble ahead for financial markets. The threatened tariffs on Canadian and Mexican goods could provide “a strong potential boost” to the Fed’s preferred inflation metric, the core personal consumption index, according to Deutsche Bank.

Now running at an annual rate of 2.2 %, personal consumption expenditures, or PCE, could increase this year by a full percentage point, complicating plans for additional Fed interest rate cuts, the bank said Tuesday.