Business executives and those who support international trade breathed a sigh of relief after President Trump refrained from immediately imposing new tariffs on his first day in office, as he had previously threatened.
That feeling of relief didn't last long. On Monday night, just hours after his inaugural address, Trump accused Canada and Mexico of allowing “a ton of people and fentanyl” into the country, with a 25% tax cut on products from Canada and Mexico by February 1. He said he plans to impose tariffs on the United States. US.
On Tuesday night, Trump expanded on the threat by saying China was sending fentanyl to Mexico and Canada, and also said he would impose 10% tariffs on Chinese goods by the same day.
The statement comes 10 days before significant taxes go into effect on the United States' three largest trading partners, which could disrupt both U.S. diplomatic relations and global supply chains. be. Together, Mexico, China and Canada account for more than one-third of the goods and services that the United States imports and exports and support tens of millions of American jobs.
Together, the three countries purchased more than $1 trillion in U.S. exports and provided the United States with nearly $1.5 trillion in goods and services in 2023.
In particular, the economies of Mexico and Canada are closely integrated with that of the United States. Supply chains for various products meander across the borders of North America, moving back and forth between fields, factories, and stores in each country, transforming raw materials into final products.
Once assembled, a single car and its parts may cross the U.S.-Canada border eight times. Blue jeans are made using cotton, fabric, and buttons from the United States, but are sewn in a factory in Mexico. U.S. farmers send corn and soybeans south of the border to be added to processed foods and animal feed. Mexican farms are sending avocados, mangoes, and tomatoes to American grocery stores for cheap, even in the middle of winter.
Adding a 25% tariff each time these products cross the U.S. border would significantly increase the cost of goods Americans buy and could even force U.S. manufacturers to shut down operations. said trade experts.
It's unclear whether Mr. Trump will actually follow through on those threats, or which products the tariffs would apply to if they were imposed. One of the people familiar with the Trump administration's deliberations said that in addition to tariffs on specific items such as autos, steel and aluminum, the administration is also considering tariffs on all imports from those countries.
The stock market largely ignored Trump's tariff announcement, closing near record highs yesterday.
The governments of Canada and Mexico, in particular, are rushing to avoid tariffs. They tried to reassure the Trump team that they were making special efforts to stop people and drugs from crossing the U.S. border, and presented a list of U.S. products that could be subject to their own tariffs accordingly. Created.
Beijing is also considering potential retaliatory options if Trump imposes tariffs. Chinese Foreign Ministry spokesperson Mao Ning said at a press conference in Beijing on Wednesday that China would “protect” its interests. “We have always believed that there are no winners in tariff wars or trade wars,” she added.
