Trump promises 25% tariffs on Canada and Mexico are coming on February 1 that will 'make us rich as hell'

• Donald Trump did not immediately impose tariffs on Inauguration Day, despite his campaign promises.
• He vowed tariffs are coming February 1 and will lead to "massive amounts of money" entering the US Treasury.
• Trade experts have said broad tariffs could increase prices for consumers and spark inflation.

President Donald Trump is back in the White House, and one of his top priorities is tariffs and trade.

While no tariffs were imposed on January 20, Trump said on Inauguration Day they'd be coming on February 1.

The president said during his inauguration speech that he plans to create the External Revenue Service, which would collect tariffs, duties, and revenues. He said this agency would lead to "massive amounts of money" coming into the US Treasury. Trump first announced his plans for the creation of the External Revenue Service on January 14.

The details of the plan are unclear, and creating a new agency requires approval from Congress.

"Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens," Trump said during his inauguration speech.

In a second speech on Inauguration Day, Trump reiterated his plan to implement new tariffs before signing a flurry of executive orders, including a freeze on federal hiring, a return-to-office mandate for federal workers, and an order to withdraw the United States from the Paris Climate Accord.

"Tariffs are going to make us rich as hell," Trump said. "It's going to bring our country's businesses back."

Trump said on Monday that he'd impose a 25% tariff on goods from Mexico and Canada on February 1, citing illegal immigration and drugs entering the US from those countries. He's previously warned of an additional 10% tariff on all goods imported from China on top of the tariffs he had already proposed.

Answering questions from reporters while signing additional executive orders at the White House on Monday, Trump said he believes tariffs will bolster manufacturing stateside.

"We're going to have a lot of companies coming in to avoid tariffs. You know, if you don't want tariffs all you have to do is build your plant in the US. So we're going to have a lot of workers coming in, but we have to have legal immigration," he said.

Asked if he was still considering a universal tariff on all countries, Trump responded, "I may, yeah, but we're not ready for that yet."

Trump's past comments on tariffs

On the campaign trail, broad tariffs were a cornerstone of Trump's platform. He proposed a 60% tariff on all goods imported from China, along with a 10% to 20% tariff on all imports from other countries.

Trump also threatened the BRICS group — which consists of emerging countries including Brazil, Russia, India, and China — with a 100% tariff on imports from those countries unless they committed to not creating another currency that competes with the US dollar.

On Monday, he reiterated his interest in slapping a 100% tariff on BRICS nations while also appearing to include Spain as part of the group. Spain is not part of BRICS.

Trade industry experts previously told Business Insider that Trump's tariff proposals could cause the prices of impacted goods to increase, leading consumers to pay more for products like electronics or apparel, creating a form of consumption tax.

A number of companies have already announced that they are preparing to raise prices in anticipation of the tariffs. Some economists have also predicted that broad tariffs could increase inflation, likely causing the Federal Reserve to raise interest rates.

Trump has denied that his tariff proposals would hurt the economy and consumers, saying during a speech in August that his plans have "nothing to do with taxes to us. That is a tax on another country."

Many economists have argued that the costs of tariffs could largely fall on US consumers; the left-leaning Center for American Progress estimated that the president's trade plans could cost the typical American household an extra $1,500 a year.

Brian Hughes, a Trump-Vance transition spokesperson, told BI that Trump "has promised tariff policies that protect the American manufacturers and working men and women from the unfair practices of foreign companies and foreign markets."

"As he did in his first term, he will implement economic and trade policies to make life affordable and more prosperous for our nation," Hughes said.

How tariffs will impact consumers and the economy

Trump implemented tariffs during his first term, which did not significantly impact inflation. Some economists, however, predict his proposals this time around could have a larger impact on the economy given their broader scope. For example, the nonpartisan Peterson Institute estimated that Trump's 60% tariff on goods imported from China would boost inflation by 0.4 percentage points in 2025.

During his inauguration speech, Trump touched on inflation concerns, which he blamed on government overspending and high energy prices. He vowed to direct members of his Cabinet to fight inflation and bring prices down by focusing on expanding domestic energy supply, specifically for oil and gas, and ramping up domestic manufacturing.

"Today, I will also declare a national energy emergency. We will drill, baby, drill," Trump said.

It's unclear how quickly consumers could see the tariffs translated into higher prices on goods or whether a drop in energy prices could counteract the effect.

In a recent report, the National Retail Federation predicted that Trump's tariff plans would raise prices on apparel and shoes, furniture, and appliances. An October report from the Consumer Technology Association estimated that the proposed tariffs would increase laptop and tablet costs by 45%.

"It's tough to say right now at what point consumers would feel the impact," Jonathan Gold, the vice president of supply chain and customs policy at the National Retail Federation, previously told BI.

"It could also depend upon the individual companies and what their tariff mitigation plans are and how much they can try and lessen the impact on the consumers," Gold added.

Trump's tariffs could also face legal challenges due to their potential violations of the US-Mexico-Canada agreement, a free-trade agreement negotiated by Trump in his first term that went into effect in July 2020.