TARIFF ON PRODUCTS TO USA
Immigration law
04 Mar
Tariffs play a
key role in Trump's economic strategy, as he views them as a means to boost the
US economy, safeguard jobs, and increase tax income. He has argued in the past
that these taxes will not burden Americans but will instead be a financial
burden on other countries. However, most economists consider this claim to be
misleading.
During his first
term, Trump imposed a number of tariffs, many of which President Joe Biden
decided to keep around, kind of like a bad roommate who never moves out.
Economic studies, however, suggest that the real cost ended up on the shoulders
of US consumers, proving once again that when it comes to paying, the consumer
always gets the bill.
The US
president-elect stated that, following his inauguration on January 20, 2025, he
would issue an executive order to implement a 25% tariff on all goods imported
from Mexico and Canada.
He also said that
on the first day of his presidency, he’d be slapping new tariffs on China,
Mexico, and Canada, hoping they would take him seriously enough to finally
tackle illegal immigration and drug smuggling because, apparently, the only
thing that gets their attention faster than a tariff is a good old-fashioned
trade war.
He also stated
that China would face an extra 10% tariff, on top of any existing tariffs,
until it took action against fentanyl smuggling. This threat could
significantly escalate tensions with the US's three largest trading partners
and may result in higher prices for Americans, as tariffs essentially act as a
tax on imported goods.
China has
confidently defended its efforts to crack down on illegal drugs, insisting it’s
doing its part in the battle. At the same time, it has warned that a trade war
with the US would be like two people fighting over a cake-neither side gets to
enjoy it, and everyone ends up worse off.
After Trump
issued his tariff threat, he had a 10-minute conversation with Canada's Prime
Minister Justin Trudeau, focusing on trade and border security, according to a
Canadian government official who described the discussion as "good."
During the call, Trudeau highlighted that the number of migrants crossing the
Canadian border was significantly lower than those at the US-Mexico border.
Meanwhile,
Mexico’s finance ministry emphasized that Mexico remains the US's top trading
partner and that the USMCA provides a solid framework for both national and
international investors.
The proposed
measures could throw a wrench into the global supply chain and hit the three
countries targeted by the tariffs harder than a coffee spill on a Monday
morning.
Trump stated on
his Truth Social platform that the tariffs on Mexico and Canada will stay in
place until both countries take stronger action against drugs, especially
fentanyl, and curb illegal migration across the border. He added that both
nations have the "absolute right and power" to easily resolve these
long-standing issues and declared, "It is time for them to pay a very big
price”.
Last year, over
80% of Mexico's exports were sent to the US, while approximately 75% of
Canada's exports went to their southern neighbor. Despite years of tension
between the world’s two largest economies, the US still represents about 15% of
China’s exports.
Scott Bessent,
Trump's choice for Treasury Secretary, once argued that the president-elect's
threats to impose significant tariff increases were simply a negotiation
tactic. In a pre-nomination interview with the Financial Times, Bessent
described Trump as fundamentally a free trader, explaining that his approach
was to "escalate to de-escalate."
USA has been
facing several pressing challenges, such as an ongoing property market crisis,
sluggish domestic demand, and rising local government debt. The deal, signed
into law by Trump, came into effect in 2020 and upheld a mostly duty-free trade
arrangement between the three neighboring countries. While the official
reactions from the involved countries were largely positive, the overall
response has been critical.
Doug Ford, the
Premier of Ontario, Canada, warned that Trump's proposed tariff would be
"devastating to workers and jobs in both Canada and the US," voicing
concerns about the economic fallout on both sides of the border.
He pointed out
that these tariffs could lead to job losses and higher costs for consumers,
making things even more expensive
because who doesn't love paying more for less? Ford’s remarks underscore
how closely linked the two economies are, and how trade barriers might just be
the economic equivalent of shooting yourself in the foot, then limping across
the border.
Reactions to how
Canada should respond are mixed among former and current political leaders from
various parties and levels, with Conservative Leader Pierre Poilievre stating
on Tuesday that he would be willing to retaliate "if necessary."
Ontario Premier
Doug Ford, who called Trump’s tariff threat "insulting," stated that
if it comes to that, "there is no choice" but to respond with
counter-measures. "Hopefully we won’t come to that," Ford added,
emphasizing that retaliation should be aimed at the administration, not the
American people, for making the wrong call. NDP Leader Jagmeet Singh also did
not rule out retaliation, calling Trump's proposal "economic
bullying."
Mexican
President Claudia Sheinbaum warned of the severe economic impact these tariffs
could cause and suggested the possibility of retaliation. In a letter to Trump,
which she read during a press conference, Sheinbaum stated, "One tariff
will lead to another in response, and so on, until we jeopardize our shared businesses."