President Donald Trump’s long-threatened tariffs against Canada and Mexico went into effect Tuesday, putting global markets on edge and setting up costly retaliations by the United States’ North American allies, reports AP News.
New Tariffs
The US has implemented new tariffs, impacting imports from Canada, Mexico, and China.
- Imports from Canada and Mexico are now subject to a 25% tariff, with Canadian energy products facing a 10% duty.
- Tariffs on Chinese imports, previously at 10%, have been doubled to 20%. China has retaliated with tariffs up to 15% on US agricultural exports and expanded the list of US companies facing export controls and restrictions.
- Canadian Prime Minister Justin Trudeau announced retaliatory tariffs on over $100 billion worth of American goods over 21 days. Mexico has not yet specified any retaliatory measures.
President Trump defends these tariffs as a powerful tool for national prosperity despite warnings from economists about potential inflation and a trade war. He believes tariffs can address the country’s economic problems, even if other politicians haven’t used them due to various reasons he suggests.
Short Lived
The tariffs may be short-lived if the U.S. economy suffers. But Trump could also impose more tariffs on the European Union, India, computer chips, autos and pharmaceutical drugs. The American president has injected a disorienting volatility into the world economy, leaving it off balance as people wonder what he’ll do next. “It’s chaotic, especially compared to the way we saw tariffs rolled out in the first (Trump) administration,” said Michael House, co-chair of the international trade practice at the Perkins Coie law firm. “It’s unpredictable. We don’t know what the president will do.’’
Democratic lawmakers were quick to criticize the tariffs, and even some Republican senators raised alarms. Sen. Susan Collins, R-Maine, said she’s “very concerned” about the tariffs going into effect because of her state’s proximity to Canada.
“Maine and Canada’s economy are integrated,” Collins said, explaining that much of the state’s lobsters and blueberries are processed in Canada and then sent back to the U.S.
The world economy is now caught in the fog of what appears to be a trade war. Even after Trump announced Monday that the tariffs were going forward, Canadian officials were still in touch with their U.S. counterparts.
Incentivizing Foreign Companies
The White House wants to see a decrease in domestic fentanyl seizures, not just at the borders, noting that recent seizures across the US have been linked to foreign cartels.
Damon Pike from BDO suggests that retaliatory tariffs from other countries (Canada and the EU have lists prepared) could escalate trade tensions and increase economic pressure.
The Trump administration downplays inflation concerns, arguing that tariffs will incentivize foreign companies to build US factories. They cite Taiwan Semiconductor Manufacturing Company’s $100 billion investment in US production as evidence. However, relocating global factories and training skilled workers takes time.
Greg Ahearn, president of The Toy Association, warns that the 20% tariffs on Chinese goods will be “crippling” for the toy industry, given that nearly 80% of US toys are made in China.
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Source: AP News
