The president-elect has promised to tax Canadian and Mexican products at 25%, and to raise taxes on goods imported from China by 10%, on top of those in place or he may add.
Donald Trump confirmed on Monday 25 November that his first economic measure after taking office in January will be the increase in customs duties on products coming from China but also from Canada and Mexico, a decision he justifies with the crisis linked to opioids and ‘immigration. “On January 20, as one of my first executive orders, I will sign all necessary documents to impose 25% tariffs on ALL products entering the United States in Mexico and Canada.”the president-elect wrote in a publication on his Truth Social network. “This tax will remain in place until drugs, especially fentanyl, and all illegal immigrants stop this invasion of our country!”he adds.
In a separate post he announces a 10% increase in customs duties, which is in addition to those already existing and any additional ones he may decide, “all the many products that come from China to the United States”. He explains that he often raised the issue of the influx of drugs, particularly fentanyl, a major contributor to the opioid crisis in the United States, with Chinese officials promising him harsh punishments. “until the death penalty”THE “traffickers”. “But they never got to the end”he regrets it.
Inflationary potential
Tariff increase, which he often described as his “favorite phrase” during his electoral campaign, it is one of the keys to the future economic policy of the president-elect, who is not afraid to revive the trade wars, in particular with China, which began during his first term with decrees, as authorized by American law. At the time he justified this policy by the trade deficit between the two countries and by Chinese trade practices that he considered unfair, also accusing Beijing of intellectual property theft. China responded with customs duties with harmful consequences especially for American farmers.
Joe Biden’s administration had maintained some customs duties on Chinese products and imposed new ones on certain products.
The nomination last week as Secretary of Commerce of Howard Lutnick, CEO of the investment bank Cantor Fitzgerald and a keen critic of China, confirmed Donald Trump’s willingness to try to bend his trading partners to obtain better deals and relocate manufacturing in the United States. As for China, it has promised customs duties of up to 60% for some products, or even 200% on imports of vehicles assembled in Mexico.
“No one will win a trade war”
Canada remembered Monday night “essential for energy supply” of the United States. “Our relationship is balanced and mutually beneficial, especially for American workers”Canadian Deputy Prime Minister Chrystia Freeland added in a news release, saying Ottawa will continue “to discuss these issues with the new administration” American. China warned as much on Tuesday “No one will win a trade war”. “China believes that trade and economic cooperation between China and the United States is mutually beneficial in nature.”wrote Liu Pengyu, spokesperson for the Chinese embassy in the United States, in an email to AFP following the president-elect’s remarks Monday evening in Washington.
Donald Trump also wants to reintroduce customs duties of 10 to 20% on all products entering the United States and the European Union has already said so “ready to react” in the event of new trade tensions. Mexico “you have no reason to worry”he had tried to reassure President Claudia Sheinbaum in the aftermath of the American elections.
The United States is a key trading partner for Mexico and Canada, and the three countries have been linked for thirty years by a free trade agreement, renegotiated under pressure from Donald Trump during his first term. The capacity of the two neighbors of the United States “Ignoring the president-elect’s threats is limited” they depend very much on it, estimates Wendy Cutler, vice president of the Asia Society Policy Institute, an American think tank.
Economists warn of the inflationary potential of such an increase in customs duties. The American Action Forum estimates that inflation will initially move away from 2%, before prices stabilize again, albeit at a higher level. According to experts, these measures could also have negative repercussions on employment.
Interview Between the Time.news Editor and Trade Expert Dr. Sarah Jennings
Editor: Welcome back to Time.news. Today, we’re diving deep into an important and timely subject—trade policies under the incoming administration. With us is Dr. Sarah Jennings, a trade economist and policy advisor. Sarah, thank you for joining us.
Dr. Jennings: Thank you for having me! It’s great to be here.
Editor: Let’s jump right in. Recently, the president-elect announced an ambitious plan to impose tariffs of 25% on products from Canada and Mexico and an additional 10% on goods from China. How significant is this move for U.S. trade relations?
Dr. Jennings: It’s monumental, to say the least. The proposed tariffs signal a strong shift towards protectionism, which could set off a chain reaction in U.S. trade relationships not just with China, but North America as a whole. While the president-elect frames these tariffs as a response to issues like drug trafficking and immigration, they could have substantial implications for the economies of Canada and Mexico, who are integral trading partners of the U.S.
Editor: You mentioned the opioid crisis as a justification for these tariffs. In your opinion, is there a clear correlation between tariffs and the fight against drug trafficking?
Dr. Jennings: That’s where it gets tricky. While it’s crucial that we address drug trafficking, particularly concerning opioids like fentanyl, using tariffs as a tool in this context is misleading. Tariffs primarily affect economic trade rather than the complexities of criminal activity and drug smuggling. We need comprehensive policies involving law enforcement, healthcare, and international cooperation to effectively tackle the opioid crisis, rather than merely imposing taxes on imported goods.
Editor: Very insightful, Sarah. And talking about the economic impact, Trump heavily criticized China’s trade practices during his first term, citing unfair practices and the intellectual property issue. How might these tariffs influence trade discussions between the U.S. and China this time around?
Dr. Jennings: Historically, increased tariffs can escalate into trade wars, as we’ve seen before. If implemented, these tariffs could provoke retaliatory measures from China, which might include higher tariffs on U.S. goods, affecting American farmers and manufacturers. It’s a cycle that can lead to significant inflationary pressure on consumers, as prices of imported goods rise. Moreover, with Howard Lutnick nominated as Secretary of Commerce—someone known for his critical stance on China—we can expect more aggressive and possibly hostile trade negotiations.
Editor: And considering the potential for inflation, what should consumers and businesses be prepared for?
Dr. Jennings: Consumers should brace for higher prices on a wide range of products, from electronics to household goods. Businesses that rely on imported materials or goods may also face increased costs, which might lead to higher retail prices. In the long term, companies may need to reassess their supply chains—some might consider relocating manufacturing back to the U.S., which is part of the broader objective of the incoming administration.
Editor: Canada is already responding more cautiously, emphasizing the importance of their economic relationship with the U.S. What could this mean for North American trade cooperation?
Dr. Jennings: Canada’s response indicates a desire to maintain constructive dialog, which is essential. A cooperative approach will be vital to address concerns about tariffs while ensuring mutual benefits remain intact. Given that Canada provides substantial energy resources and is a critical partner in numerous industries, a breakdown in trade relations could be detrimental for American workers and consumers alike.
Editor: the phrase “no one will win a trade war” keeps coming up. What do you think this really means for the future if hostilities escalate?
Dr. Jennings: It implies a cautionary tale based on historical precedent. Trade wars often lead to economic strife for all involved. While the intent is to protect domestic industries, the reality is that everyone tends to lose in terms of economic growth, job stability, and market access. Navigating these waters carefully is essential, and fostering collaboration rather than confrontation will be the key to maintaining a healthy trade balance.
Editor: Thank you, Dr. Sarah Jennings, for your valuable insights today. As the new administration prepares to take office, your expertise helps us understand the broader implications of these trade policies.
Dr. Jennings: Thank you for having me. It’s always a pleasure to discuss such pivotal issues!
Editor: And thank you to our viewers. Stay tuned as we continue to cover changes in economic policy and their effects on our global landscape.