U.S.-Colombia Trade: The Shot Heard Around the World

What’s Happening: On Sunday, January 26, President Trump posted on Truth Social that he would be implementing 25-percent tariffs on Colombia – to be doubled the following week – alongside sanctions and various visa restrictions. The president’s threats were made in response to Colombian President Gustavo Petro’s apparent refusal to accept repatriation flights of Colombian nationals residing illegally in the United States. The major point of contention was the use of U.S. military planes rather than chartered flights. After Trump’s tariff threats, backed by the authority originating from the International Emergency Economic Powers Act (IEEPA), Petro eventually agreed to allow deportees from the United States to land in Colombia, thus averting a serious exchange of punitive trade restrictions. Worth noting is that Petro briefly posted on X that he was willing to retaliate with 50-percent tariffs of his own, but this threat never materialized.

Why It Matters: The back and forth between the two national leaders revealed what President Trump is willing to do to achieve his immigration agenda and sheds light on the fact this administration is willing to use tariffs as an all-purpose tool rather than to simply address economic concerns. This includes using untested IEEPA tariff authority to impose tariffs of up to 50 percent on roughly $17 billion worth of imports from Colombia and in turn face retaliation on nearly $18 billion in U.S. exports. (Yes, the United States had a trade surplus with Colombia in 2023, a frequently mentioned priority of Trump trade policy.) Additionally, $2.4 billion worth of U.S. imports are sourced 50 percent or more from Colombia, meaning any tariff would have almost certainly been strictly passed on to consumers. In terms of diplomacy, the Community of Latin American and Caribbean States (CELAC) initially called for an emergency meeting, but called it off once the United States-Colombia feud died down.

Looking Ahead: Colombia can be looked at as the canary in the coal mine of U.S. tariff policy going forward. This game of tariff chicken turned out to be a success for the Trump Administration, as it touted Colombia’s complete acceptance of U.S. demands. Other attempts by President Trump to achieve concessions from other countries may not be as successful, depending on the economic size of the target. For instance, if the United States were to officially impose tariffs on either the European Union or China, Trump could likely expect to face retaliation and a less generous negotiating environment. Furthermore, if CELAC were to unite against future tariff actions, the United States would be up against a bloc that represents 600 million people, a $7 trillion economy, and the largest food producers in the world.

February Fright: Tariffs on Canada, Mexico, and China

What’s Happening: While signing executive orders and answering press questions on January 20, President Trump stated that he may impose 25-percent tariffs on both Canada and Mexico alongside a 10-percent tariff on China around February 1. It is unclear whether negotiations are underway between the United States and these trade partners to avoid a trade war. What is clear is that Trump is willing to use tariffs as leverage to achieve his political aims, whatever they may be, and the likely vehicle for February tariffs will be the IEEPA.

Why It Matters: Mexico, Canada, and China represent the United States’ top three trade partners, accounting for roughly 43 percent of all U.S. imports. Across-the-board tariffs on these countries would have a major economic impact, with a high-end cost of potentially hundreds of billions of dollars annually. A more moderate estimate that factors in anticipated tariff evasion, the tariff burden, and other offsets puts government revenue, and therefore consumer costs, at just above $30 billion on an annual basis, according to the Shipment’s calculations. In either scenario, the tariff implementation mechanism, IEEPA, would be officially used for the first time, which sets a new precedent for presidential authority.

Looking Ahead: It is anyone’s guess whether the United States will soon implement one of the largest tariff hikes in its history. During a press conference on Tuesday, White House Press Secretary Karoline Leavitt confirmed that President Trump is still considering implementing tariffs this weekend. If this week provides any indication, it is possible that upcoming tariffs may be limited to specific products and sectors. For instance, President Trump on Monday stated that there may soon be tariffs on pharmaceuticals, semiconductors, steel, aluminum, and copper. This messaging sends mixed signals, however, indicating that while tariffs may in fact hit in February, they may not apply to every imported product.