President Donald Trump said Monday evening that he plans to impose trade tariffs of as much as 25% on Mexico and Canada by the start of February. 

"We're thinking in terms of 25% (tariffs) on Mexico and Canada because they're allowing a vast number of people" over the southern and northern borders, Trump told reporters in the Oval Office on Monday night. He noted that Canada is "a very bad abuser" and said the target date for levies would be, "I think, Feb. 1."

Earlier in the day, during the inaugural address, Trump told the American people inside the US Capitol Rotunda, "Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens." He stopped just short of pointing out which countries would be targeted in the first round of the trade war. 

It's no secret that Trump's 'America First' agenda includes imposing across-the-board tariffs on top trading partners. However, the timing and extent of these measures remain uncertain. Speculation suggests that the rollout of tariffs could proceed more gradually than initially anticipated, particularly since the president chose not to unveil China-specific tariffs on his first day in office.

Goldman Sachs Chief Economist Jan Hatzius, alongside Alec Phillips, David Mericle, and others, told clients that Trump's first day of trade announcements was "more benign than expected," adding, "Trump's comments on China were notably less hawkish than during the presidential campaign or even his more recent comments since the election." 

Hatzius said, "And while we viewed a "universal tariff" as a clear risk, his comments suggest that, for now, it is a lower priority than we would have expected." 

Trump avoided committing to a China tariff plan at the inaugural address, victory rally, and in the Oval Office. He told reporters yesterday evening that he would be having "meetings and calls" with Chinese President Xi Jinping. Trump appears to be in the 'Art of Deal' negotiating phase with Beijing. 

As a result, the team of analysts led by Hatzius said, "We are lowering our odds of a roughly 20pp tariff hike on imports from China from 90% to 70% but maintain it as the base case." 

Here's more color on the trade situation from the analysts:

In light of the April 1 deadline for recommendations in yesterday's presidential memorandum on trade policy, we assume implementation in Q2 but the risk leans toward later implementation. We continue to expect tariffs on EU autos, with a 55% probability. Despite Trump's comments, we continue to believe the odds of a 25% tariff on Canada and Mexico are low (20%).

We are lowering our odds of a universal tariff this year to 25%. If President Trump ultimately implements a tariff affecting all countries, we believe it is more likely to be targeted at "critical imports" (between 10-20% of total US imports) or otherwise narrower than the "universal" tariff Trump proposed during the campaign. However, while we view this as a risk, for now we do not include it in our base case.

Hatzius noted that Trump's Inauguration Day tariff comments and his presidential memorandum on trade policy were "net dovish" but included surprises in both directions. The analysts revised their tariff probability forecasts: 

Based on Trump's comments and memo, Hatzius does not believe universal tariffs "are likely in the near term." 

"While it is still early days, we are lowering our odds of a universal tariff this year to 25%," he said, adding that the president's comments and memo also show that planned China tariffs "carried a more benign tone." 

However, the analysts noted, "Trump's comments on Canada and Mexico were much more hawkish than the presidential memo on trade but we do not expect tariffs on Canada or Mexico in the near term." 

Trump has been known to change his mind very abruptly, leaving the possibility of a sudden shift back to focusing on China. He appears to be in the negotiation phase with Beijing and moving closer to the implementation phase of his trade agenda in North America.