Business executives and others who support international trade breathed a sigh of relief when President Trump did not immediately follow through on his promise to impose new tariffs on his first day in office.
This relief was short-lived. On Monday night, hours after his inaugural speech, Mr. Trump said he planned to impose 25 percent tariffs on Canadian and Mexican products starting Feb. 1, claiming that Countries were allowing “masses of people and fentanyl” into the United States.
On Tuesday evening, Mr Trump said he would also impose an additional 10 per cent tariff on Chinese products by the same date, accusing China of sending fentanyl, which was then entering the US, to Mexico and Canada.
Mr Trump’s threats come just 10 days before significant tariffs are set to be imposed on three of America’s biggest trading partners, a move that could upend US diplomatic relations and global supply chains.
Mexico, China and Canada account for more than a third of the goods and services that are imported or purchased from the United States, supporting tens of millions of American jobs. Together, the two countries bought more than $1 trillion in U.S. exports and provided nearly $1.5 trillion in goods and services to the U.S. in 2023, the last year official data is available.
While tariffs have long been used by the United States as punishment for unfair trade practices, Mr. Trump’s first use of them is aimed at a completely different outcome: Americans against immigrants and illegal drugs. Tightening the borders.
Those targets could mean that Mr. Trump’s tariffs are less likely to be implemented, or that they are more likely to be removed if they are. That’s in contrast to other tariffs his team is planning, which would seek to restructure global supply chains and raise revenue for the government.
It is also unclear which products the tariffs will apply to if they are imposed. A person familiar with the Trump administration’s discussions said it was considering tariffs on all imports from those countries, as well as tariffs on specific goods such as cars, steel and aluminum. The Trump administration did not immediately respond to a request for comment.
Stock markets largely shrugged off Mr Trump’s tariff statements and closed near record highs yesterday.
Officials in Canada, Mexico and China are working to draw up lists of US products that they could retaliate with if Mr Trump chooses to go ahead.
But they are also responding to Mr. Trump in ways that suggest his tariff threats are working. The Canadian and Mexican governments in particular have been quick to try to stop the tariffs, sending officials to reassure the Trump team that they are trying to address its concerns.
Mexico’s government is expanding. Efforts to prevent displacement and increased visits to illegal opioids. Canada has also pledged new resources to patrol its border, including the deployment of two new Black Hawk helicopters and the purchase of 60 US-made drones for border surveillance. Canada’s immigration department says illegal immigration crossings have dropped 86 percent in the past two months, a result of tightening its visa rules. Illegal crossings at the US-Mexico border are near a four-year low.
It is unclear whether the Chinese government has taken any new steps in response to Mr. Trump’s recent tariff threats, but Mr. Trump said he discussed fentanyl as well as trade and other issues in a phone call with Chinese leader Xi last Friday. Issues have been discussed. Jin Ping.
The Chinese government made commitments to the U.S. during both the Trump and Biden administrations to curb exports of fentanyl and precursors. During Mr. Trump’s first term, China introduced a ban on fentanyl and began coordinating efforts with the United States to catch traffickers. And in 2023, Mr. Xi and former President Joseph R. Biden Jr. agreed to a series of bilateral talks on drugs after meeting in Woodside, California.
Asked whether the U.S. and China had discussed the possibility of 10 percent tariffs on Chinese products, Chinese Foreign Ministry spokesman Mao Ning said at a news briefing in Beijing on Wednesday that China had discussed with the U.S. is “willing” to do. States should expand cooperation and manage differences between the two countries.
“We always believe that there are no winners in a tariff or trade war,” he added. We will always protect our national interests firmly.
In a Senate confirmation hearing last week, Treasury Secretary nominee Scott Besant listed three main reasons why the Trump administration could impose tariffs. Some tariffs are intended to remedy unfair trade practices, while others may raise revenue for the federal budget.
He added that Mr. Trump, as a skilled negotiator, “has added a third use of tariffs.” He said the tariffs could be used for negotiations, including with Mexico over the fentanyl crisis.
Douglas A. Irwin, an economic historian at Dartmouth College, said there are few examples in history when American leaders have linked trade actions to non-trade goals — such as President Nixon’s return of Okinawa to Japan. The adoption of export restrictions was conditional. in textiles — but that Mr. Trump was “very clear and transactional” in his approach. “It’s quite unique and unusual,” he said.
Business owners have expressed concern over the prospect of new tariffs. Economists Estimated that a 25 percent tariff on Canadian and Mexican goods could cut the size of the U.S. economy by hundreds of billions of dollars, as well as potentially void the trade agreement between the three countries, which its members One needs to avoid such actions.
The economies of Mexico and Canada in particular are closely integrated with the US economy. The supply chain of various goods travels back and forth across North American borders, between farms, factories and stores in each country as they are transformed from raw materials into finished products.
A single car and its parts can cross the US-Canada border multiple times once assembled. A pair of blue jeans may be made from cotton, fabric and buttons from the United States, but sewn in a factory in Mexico. Farmers in the United States ship corn and soybeans south of the border to be added to packaged foods and animal feed. Mexican farms send cheap avocados, mangoes and tomatoes to American grocery stores, even in winter.
If a 25 percent tariff were added every time one of these products crossed the U.S. border, it could significantly increase the cost of goods purchased by Americans and even shutter U.S. manufacturers. can be forced to do.
“The supply chain challenges we’ve faced in recent years pale in comparison to what’s on the horizon,” said Jonathan Colehauer, managing director of global supply chain management at UST, a consulting firm.
Threats of tariffs recall events during Mr Trump’s first term. In the spring of 2019, Mr. Trump vowed to close the U.S. border with Mexico, then threatened a 5 percent tariff on all Mexican products, rising to 25 percent unless the country stopped immigration and asylum. Does not stop the flow of searchers. Mr. Trump ultimately decided not to follow through on these threats.
Matina Steves Gurdneuf And Si Zhao Contributed to research and reporting.
