President Donald Trump implemented his much-promised tariffs on Tuesday against Canada and Mexico. This sent global markets into a frenzy and set up expensive retaliation from the United States and its North American allies.
From midnight onwards, all imports to Canada and Mexico will be subject to a 25% tax, while Canadian energy products are only subject to a 10% duty.
Trump doubled the 10% tariff he imposed on Chinese imports from February to 20%. Beijing responded with up to 15% tariffs on an array of U.S. agricultural exports. The number of U.S. firms subject to export restrictions and controls was also increased by around two dozen.
Justin Trudeau, the Canadian prime minister, said that his country will impose tariffs of more than 100 billion dollars on American products over 21 days. Mexico did not immediately announce any measures of retaliation.
He promised that tariffs on imported goods would be the quickest way for the United States to prosper. The president has demonstrated a willingness not to listen to the mainstream economists’ warnings, and he is willingly putting his public image on the line. He believes that tariffs will fix the problems in the United States.
Trump, Monday in the White House, said: “It is a powerful weapon which politicians haven’t used either because they are dishonest or stupid. Or maybe paid some form of bribe. Now we are using them.”
Tariffs on Canada and Mexico were originally scheduled to start in February. However, Trump has agreed to suspend them for 30 days to allow him to continue negotiations with his two biggest trading partners. Both countries claim that they have made progress in addressing drug trafficking, illegal immigration, and other issues. Trump also stated that the tariffs would only be reduced if the U.S. Trade Balance is closed, which will not happen on any political timetable.
Tariffs could be temporary if they hurt the U.S. Economy. Trump may also increase tariffs against the European Union and India. He could also target computer chips, automobiles, pharmaceuticals, or auto parts. Trump has created a world of uncertainty and disorientation in the economy. People are wondering what he will do next.
Michael House, Perkins Coie’s co-chair for international trade, said that the situation is chaotic. “It’s unpredictable, we don’t know what the President will do.”
Even some Republican Senators expressed alarm over the tariffs.
Susan Collins (R-Maine) said that she is “very worried” about tariffs coming into effect due to the proximity of Maine to Canada.
Collins explained that Maine and Canada are interconnected, as much of Maine’s blueberries and lobsters are sent to Canada for processing and are then shipped back to the U.S.
The world economy is now in a fog from what seems to be trade war
Canadian officials have been in contact with their U.S. counterparts even after Trump’s announcement on Monday.
Bill Blair, Canadian Minister of Defense at Ottawa’s special cabinet meeting about U.S. Canada relations, said: “The dialogue is going to continue but we will be ready to respond. There are discussions still taking place.”
Trudeau announced shortly after Blair’s speech that Canada will impose tariffs of 25% on American goods worth $155 billion Canadian dollars (107 billion U.S.). The tariffs would be applied to $30 billion Canadian dollars ($21 billion U.S.) immediately, and the remainder of American products within three weeks.
Trudeau stated that “our tariffs will stay in place until U.S. Trade Action is removed, and should U.S. Tariffs continue, we have active, ongoing and ongoing discussions with the provinces and territories in order to pursue several other non-tariff actions.”
White House officials would like to reduce seizures of fentanyl within the United States and not only on its northern or southern border. Officials in the administration claim that the fentanyl seizures made last month from Louisiana to New Jersey were linked to cartels abroad.
Damon Pike is the technical leader of customs and trading services for BDO’s tax and consulting company. He suggested that the response from other countries may escalate trade tensions and increase economic pressure.
Pike stated, “Canada is ready with their list. The EU also has a list. It’s going be tit-for-tat.”
Trump has said that tariffs could encourage foreign firms to set up factories in the United States and, therefore, reduce inflation. Trump announced on Monday that Taiwan Semiconductor Manufacturing Company (the computer chipmaker) would invest $100 billion into domestic production.
It can still take some time for factories to be relocated and workers trained in the necessary skills.
Greg Ahearn said that the tariffs of 20% on Chinese products will “cripple” the toy business, since nearly 80% of the toys in the U.S. are made in China.
He said that the manufacturing and tooling were very sophisticated. There’s lots of handcrafting in these toys, which many people do not understand. This includes face painting, face masks, and hair braiding. The supply chain with China has passed down generations of skilled labor and high-level hands.
Ahearn cautioned that the U.S. could not match its Chinese competitors as quickly as President Obama had promised.
He said, “That cannot be repeated overnight.”
