The move comes after months of mounting frustration from the president that despite more than two years in office he has failed to drive down illegal immigration numbers.
Earlier this year Mr Trump forced out most senior figures in Homeland Security, the government department which handles immigration, and indicated he wanted a tougher approach.
The tariff will begin at 5 per cent on June 10 and rise to 10 per cent on July 1, 15 per cent on August 1, 20 per cent on September 1 and 25 on October 1. All goods imported from Mexico will be impacted.
But the White House made clear the first tariff and subsequent increases could be scrapped if Mexico does enough to drive down illegal border crossings into America before those deadlines.
During a White House briefing, senior administration figures noted that at any one time some 100,000 migrants are passing through Mexico on their way to America’s southern border.