Investing.com -- President Donald Trump refrained from imposing immediate tariffs on Monday, contrary to prior promises, but said he is considering a 25% duty on imports from Canada and Mexico starting Feb. 1 over illegal immigrants and fentanyl crossing into the U.S.
Instead of swift action, Trump directed federal agencies to investigate U.S. trade deficits, currency manipulation, and unfair trade practices.
In a presidential memo, he tasked the Commerce and Treasury departments, along with the U.S. Trade Representative (USTR), to evaluate the economic and security risks of trade deficits and propose “appropriate measures, such as a global supplemental tariff, or other policies, to remedy such deficits."
Investors had anticipated immediate tariffs that could disrupt longstanding agreements, but the memo’s focus on research provided a temporary reprieve, spurring a rally in global stocks and a rise in other currencies against the dollar. U.S. markets, closed for the holiday, were set to reopen Tuesday.
When asked about broader tariffs, Trump responded, "We may. But we're not ready for that yet." Regarding Canada and Mexico, he said he was considering a 25% tariff because the two countries were allegedly letting "vast numbers of people" and fentanyl into the U.S.
The new president also said he wanted to address the U.S. trade deficit with the European Union, through tariffs or increased energy exports.
Trump emphasized tariffs throughout the day, calling them a source of "massive amounts" of federal revenue that would help rebuild American industries.
"Tariffs are going to make us rich as hell,” he told supporters at Capital One (NYSE:COF) Arena in Washington. It's going to bring our country's businesses back that left us."
The memo also directed USTR to evaluate China's compliance with the 2020 "Phase 1" trade deal, which required Beijing to increase U.S. purchases by $200 billion over two years. The pandemic, however, hindered China’s ability to meet those targets.
USTR will assess this and recommend actions, including tariffs, if necessary. It also called for a review of China’s Most Favored Nation trading status and investigations into practices that could burden U.S. commerce, echoing Section 301 investigations from Trump’s first term.
Moreover, Trump delayed enforcing a ban on TikTok but hinted at tariffs if Beijing failed to approve a U.S. deal for the app. His campaign promises included steep global and Chinese tariffs to curb a $1 trillion trade deficit, a move experts warn could disrupt agreements like USMCA and raise costs.
The memo also urged public consultations to prepare for a 2026 USMCA review and evaluate its impact on American stakeholders. Despite expectations that Trump might invoke emergency powers for tariffs, an administration official told Reuters the president plans to coordinate with Congress, with nominees for Commerce and Treasury, Howard Lutnick and Scott Bessent, set to advance his trade agenda soon.