“China is no longer the same as it was eight years ago when Trump first took office, either in terms of mindset, strength or international standing. China has gained more status and confidence,” said Wang Yiwei, a professor of international studies at Renmin University in Beijing.

“We now understand Trump’s personality – once China shows weakness, he will push further. Therefore, China absolutely cannot make concessions, especially at the beginning.”

Chinese leaders will be particularly concerned about Trump’s new foreign policy team’s stance on Taiwan, the reddest of red lines for Beijing.

Rubio has been a steadfast supporter of Taiwan, a self-governing democracy Beijing has vowed to bring under its control, by force if necessary. He has pushed for a raft of legislation to strengthen ties between Washington and Taipei, including fast-tracking US arms sales to the island.

Taiwan President Lai Ching-te congratulated Rubio on his nomination in a post on X, thanking him for his “staunch support for Taiwan” and expressing anticipation for “furthering Taiwan-US relations.”

National security pick Waltz, meanwhile, has urged the next US president to bring the conflicts in Ukraine and the Middle East to a “swift conclusion” and focus strategic attention on Asia to better prepare for a potential Chinese invasion of Taiwan – a stance that Trump running mate JD Vance also repeatedly voiced on the campaign trail.

But that doesn’t mean Trump – whose “America First” agenda has promoted a more isolationist foreign policy – will spoil for an overseas fight. Instead, he has long viewed alliances and Washington’s historical commitments in more transactional terms, while often praising autocratic overseas leaders.

On the campaign trail, Trump accused Taiwan of “stealing” the chip industry from the US and said that the self-governing democracy should pay the US for protection.

Industry experts say Taiwan grew its own semiconductor industry organically through a combination of foresight, hard work and investment. And the island has purchased the vast majority of its weaponry from US arms manufacturers over recent decades. But Trump’s campaign rhetoric nonetheless hinted at a more transactional approach to Taiwan.

Asked by The Wall Street Journal in an interview if he would use military force against a blockade of Taiwan by China, Trump said it would not come to that because Xi respected him and knows he’s “crazy.” Instead, he said he would slap 150% to 200% tariffs on Beijing.

Wang, the professor at Renmin University, said whatever their ideological leanings, Trump’s cabinet picks will ultimately have to comply with his vision.

“I believe Trump is willing to make deals with China, and he will ensure his team stays on course,” he said.

“I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail,” Trump posted on Truth Social.

The president-elect claimed in the post that Chinese officials promised him the country would execute drug dealers caught funneling drugs into the United States but “never followed through.”

Responding to Trump’s announcement, Chinese Embassy spokesperson Liu Pengyu said his country has been in communication with the US about counternarcotics operations and that “the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”

“About the issue of US tariffs on China, China believes that China-Us economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a tariff war,” Liu said in a statement to CNN.

Mexico’s President Claudia Sheinbaum responded Tuesday, warning the president-elect that “neither threats nor tariffs will solve the issue of migration or drug consumption.”

“Imposing one tariff would mean another comes in response, continuing like this until we put shared companies at risk,” she said, reading from a letter addressed to Trump.

Canadian officials responded to the announcement in a statement posted to X on Monday night, saying that their country “places the highest priority on border security and the integrity of our shared border” and is “essential to US domestic energy supply.”

“We will of course continue to discuss these issues with the incoming administration,” Canada’s Deputy Prime Minister Chrystia Freeland and Public Safety Minister Dominic LeBlanc said in the statement.

Canadian Prime Minister Justin Trudeau called Trump shortly after his social media post, an official with the prime minister’s office said. The brief call was focused on border security and trade, a senior Canadian government source told CNN. They characterized the call as productive and said that Trudeau and Trump promised to stay in touch in the days to come.

Trudeau confirmed the call in Ottawa before arriving at a Cabinet meeting, saying, “This is a relationship that we know takes a certain amount of working on and that’s what we’ll do.”

“We obviously talked about laying out the facts, talking about how, how the intense and effective connections between our two countries flow back and forth,” Trudeau said. “We talked about some of the challenges that we can work on together and it was a good call. It’s something that we can do laying out the facts moving forward in constructive ways.”

A significant policy change

The punishing tariffs, if enacted, could wreak havoc on America’s supply chains and industries reliant on goods from the country’s closest trading partners.

“The measures proposed this evening could hit a number of strategic US industrial sectors hard, add approximately $272 billion a year to tax burdens, raise goods prices, lift interest rates, and sap strength in an already-vulnerable household sector,” said Karl Schamotta, chief market strategist at Corpay Cross-Border Solutions.

Immediately after the announcement, the Canadian dollar fell 1.2% against the US dollar, and the Mexican peso fell 2% against the dollar, but both recovered some of their losses Tuesday morning. China’s yuan, though controlled by the government, traded higher – above 7.6% – in offshore markets.

Although investors believed the tariffs could ultimately strengthen the dollar, America’s financial markets took a hit, too. The extraordinary tariffs would raise costs dramatically for Americans for everyday goods that had previously come over the border without any import taxes.

That stunning shift could stymie economic growth, especially if inflation-weary consumers spend less in the face of higher costs.

The Dow fell 50 points, or 0.1%, Tuesday. The broader S&P 500 and Nasdaq were slightly higher.

What America imports

The United States’ top import from Canada is oil, which reached a record 4.3 million barrels per day in July, according to the US Energy Information Administration. America also imports cars, machinery and other various commodities, plastics and wood from Canada, according to the United Nations’ Comtrade.

America imports the majority of its cars and car parts from Mexico, which surpassed China as the top exporter to the US in 2023, according to trade data released by the Commerce Department earlier this year. Mexico is also a major supplier of electronics, machinery, oil and optical apparatus, and a significant amount of furniture and alcohol comes from the country into the United States.

The United States imports a significant amount of electronics from China, in addition to machinery, toys, games, sports equipment, furniture and plastics.

During Trump’s first term, CNN reported that he implemented tariffs on about $380 billion worth of goods that applied to thousands of Chinese-made products, including baseball hats, luggage, bicycles, TVs and sneakers. The Trump tariffs also hit foreign steel, aluminum, washing machines and solar panels.

Many US imports from Canada and Mexico are exempted from tariffs because of the USMCA trade agreement between the three nations that Trump pushed for during his first administration. It’s not clear how Trump would plan to implement the proposed tariffs without violating the USMCA.

Trump has routinely referenced the passage of the USMCA, which replaced NAFTA, as a political victory and a highlight of his presidency.

Trump’s tariff plan

Trump campaigned on using tariffs as a cudgel against foreign countries – as he did in his first administration – to grow domestic manufacturing while increasing tax revenue to pay for large revenue gaps that his proposed tax cut plan would create.

Tariffs effectively serve as a tax on goods imported to the United States. Although Trump has repeatedly said targeted foreign countries pay the tariffs, they are in fact paid by companies that purchase the imported goods – and those costs are typically passed onto American consumers. Most mainstream economists believe tariffs will be inflationary, and the Peterson Institute for International Economics has estimated Trump’s proposed tariffs (before the new tariffs announced Monday night) would cost the typical US household over $2,600 a year.

Scott Bessent, Trump’s pick for Treasury secretary, has said that tariffs would not add to inflation if they are implemented correctly. Wall Street cheered Bessent’s appointment, because he is widely expected to roll out tariffs gradually.

Although Bessent, if confirmed by the Senate, will be partly responsible for implementing the tariffs, in coordination with the Commerce secretary and US Trade Representative, Trump as president would wield significant power to levy tariffs with the stroke of a pen. He did just that when he was last in the White House, placing large tariffs on goods, primarily from China.

The problem with tariffs is that they often result in retaliatory actions by targeted countries, kicking off a trade war – and that’s exactly what happened during Trump’s first term. That blunted the tariffs’ effect on domestic manufacturing, because manufacturers’ goods became less attractive to overseas buyers.

Trump has promised significantly larger tariffs during his second term. Although he continues to discuss many different numbers, he has proposed a tariff upward of 60% on all Chinese goods, as well as an across-the-board tariff of either 10% or 20% on all other imports into the US.

 

During President-elect Donald Trump’s first term, America launched an all-out trade war with China to boost US manufacturing, secure US national security interests and resolve what Trump believed was an extremely out-of-balance trade relationship.

President Joe Biden kept most of those tariffs in place and added a few new ones, too. While leaders of the two nations continue to butt heads, US consumers have paid the price, shelling out more money on goods imported from China.

Now, Trump is focusing his attention on America’s largest and third-largest trading partners: Mexico and Canada. And he’s promising something extraordinary: Come January 20, the day Trump is set to be inaugurated, he pledges he will slap a new, 25%, across-the-board tariff on all goods the US imports from its closest neighbors — goods that are almost all coming across the border for free because of the Trump-negotiated US-Mexico-Canada Agreement, or USMCA.

Translation: Brace yourself for a potential trade war that could seriously lighten your wallet.

Here are some of the top consumer goods Americans buy from their neighbors to the north and south that could get more expensive if Trump follows through with his tariff plan:

Gas

Crude oil, which is refined to produce gasoline and heating oil, is one of the top imports to the US from Canada. In July it reached a record of 4.3 million barrels per day following the expansion of Canada’s Trans Mountain pipeline, according to data from the US Energy Information Administration.

The expansion has helped deliver more oil to be refined to much of the West Coast in addition to the Midwest, where it previously served most prominently.

Oil pumpjacks and tanks are pictured in a farmer’s field near Kindersley, Saskatchewan, Canada, on September 5.

Todd Korol/Reuters

“You can’t simply process different oil overnight. It would take investments/years. More US supply wouldn’t help,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a post on X.

The 25% tariff Trump floated Monday would have “huge impacts” on gas prices, amounting to an increase of between 25 cents to 75 cents per gallon, De Haan said. That would most directly impact Americans located around the Great Lakes, Midwest and Rockies.

Trump has proposed ramping up American oil permit grants, but it would take time for that supply to come online to replace oil from Canada. And it’s unclear that US energy companies would want to produce significantly more oil — global demand is slowing, and profit from ramped-up drilling would be harder to come by.

Produce

As climate change has made growing conditions in parts of the United States less favorable, the US has grown increasingly reliant on Mexico for produce.

In 2022, the US imported $44.1 billion worth of agricultural products from Mexico, amounting to a fifth of all US agricultural products, according to Commerce Department data.

A farmer works at an avocado plantation at the Los Cerritos avocado group ranch in Ciudad Guzman, state of Jalisco, Mexico, February 10, 2023.

Ulises Ruiz/AFP/Getty Images

For example, 90% of the avocados Americans consumed in 2022 were imported. Of the avocados imported into the US, 89% came from Mexico. Said differently, your guac and your avocado toast could skyrocket if 25% tariffs are levied on Mexico.

Cars

The United States imported $44.76 billion worth of vehicles from Mexico in 2023, making it the number-one import, according to Commerce Department data.

As more car manufacturers sought to get around tariffs imposed on Chinese goods, many moved their production to Mexico, making it a global hub for car factories, including General Motors, Ford, Stellantis and nearly a dozen more.

On Tuesday, shares of US carmakers plunged, with General Motors taking the biggest dive, closing down 9%.

A General Motors complex in Silao, Mexico, in 2022.

Maurico Palos/Bloomberg/Getty Images

Virtually every American auto manufacturer depends on parts from Mexico to build its cars or trucks, because those parts can be substantially cheaper than those made in the US. But a 25% tariff would likely be a game changer there.

And, behind cars themselves, car parts were the second-most imported good from Mexico last year.

Alcohol

Most of the alcohol the US imports comes from Mexico.

For instance, Mexico provided the US with more than 80% of total beer imports in the first three quarters of FY 2024, according to US Department of Agriculture data.

Additionally, tequila from Mexico and liqueurs from Canada have been “primary drivers of import growth” of distilled spirits, per the USDA.

Last year, the US imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico, according to data from the Distilled Spirits Council, a trade group. That year, the US also imported more than half a billion dollars worth of Canadian spirits.

“At the end of the day, tariffs on spirits products from our neighbors to the north and south are going to hurt US consumers and lead to job losses across the US hospitality industry just as these businesses continue their long recovery from the pandemic,” Distilled Spirits Council president and CEO Chris Swonger said in a statement on Tuesday.

Bottom line: It’s going to hurt

The new round of tariffs Trump is prepared to impose comes as the US has grown increasingly reliant on imports from Mexico and Canada.

For the first time in more than two decades, Mexico overtook China as the top exporter of goods to the US last year, according to Commerce Department trade data. China is now the No. 2 exporter of goods into the US, and trailing very close behind it is Canada. That’s a big shift from just two years ago, when China was the top exporter of goods into the US, and Canada and Mexico hardly came close.

This means that the new tariffs Trump pledged will be virtually inescapable for Americans, as businesses facing higher costs will likely pass that along to consumers.