Trump Signals Tariffs from Day One

As participants in the global economy continue to consider the impact that Donald Trump’s policies could have, the President-Elect has given perhaps his strongest indication that a string of tariffs will be pushed through on day one.

Writing on Truth Social, Donald Trump said that “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders”.

The self-proclaimed “Tariff King” indicated that the measures would remain in place until America’s neighbouring counties addressed the flow of drugs – including particularly fentanyl – and migrants across their borders.

The scale of the tariffs proposed are hard to understate, not least when considering that the US is the destination of around 80% of Mexican imports and 75% of Canadian imports.

He continued in a subsequent message stating that “will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America”.

In rebuttal, a spokesperson for the Chinese Embassy in Washington said that “China-US economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a tariff war.

As we looked at earlier this month, one of the most important considerations is how Beijing could react come January. With China representing the US’ second largest trading partner in terms of imports, the stakes could hardly be higher, and some are bracing for a continuation of the fragile relations seen during Trump’s first term and the subsequent response from China. As cited in The Washington Post, Wang Yiwei of Beijing’s Renmin University surmised that Beijing are likely to retaliate hard from the outset in order to have greater leverage at the negotiation table further down the line. The article also suggested that Beijing will be better prepared this time around, with China likely to target key US agricultural products such as soybeans and corn given its impact on US farmers – a workforce that Trump is keen to keep onside particularly in the run up to the 2026 midterms.

Trump intention to use executive orders will allow him to bring these policies immediately. This is because an executive order is a directive signed by the President which has the same effect as federal law (being entered into the Federal Register) and bypasses the standard legislative process. While Congress can pass a law to override an executive order, the President can veto it.

TTF Gas Futures – the European benchmark – appreciated to one-year highs during yesterday’s session as supply and demand side fears continued to filter through the market place. By yesterday’s close TTF gas futures were trading just under €48 per megawatt hour – a rise of over 2% on the day and 12% on the month.

Supply-side concerns have been exacerbated following further geopolitical fragility given recent developments in the conflict in Ukraine and the impact this could have on Russian supplies of gas to Europe. Meanwhile, on the demand side, a cold snap across much of the continent has increased consumption forecasts.

As the continent approaches winter, European gas storage facilities are around 88% full, some 10% lower than this time last year.

Gas prices in the US also appreciated throughout the course of yesterday’s session with US natural gas prices rising 5%, meaning they are now trading close to 19% up on the month.

Meanwhile on Monday, UK natural gas prices were trading around 1.7% higher on the day, having touched 122 pence per therm. Prices have risen close to 50% on a year-to-date.