Donald Trump has vowed to implement comprehensive tariffs on imports from Canada, Mexico, and China beginning this weekend, a move that may trigger a significant trade conflict involving the US and three of its major trade allies. Trump has also threatened further tariffs targeting the European Union.
The White House Press Secretary, Karoline Leavitt, confirmed on Friday that Canadian and Mexican exports to the US will face a 25% tariff, and Chinese goods will be subject to a 10% tariff.
Details on the exact scope of the tariffs, slated to start on February 1, were not provided by the administration, despite Trump’s frequent assertions.
In a statement from the Oval Office, Trump suggested that Canadian oil (Canada being a major crude exporter to the US) might see a reduced tariff of 10%, with expectations of further oil and gas-related duties around February 18.
Despite Trump’s insistence that there is no immediate remedy from Canada, Mexico, or China to prevent these tariffs, it is reported that efforts are underway to negotiate a last-minute resolution, according to the Wall Street Journal.
Leavitt refuted claims that the implementation of the tariffs would be delayed by a month, stating, “Starting tomorrow, these tariffs will take effect.”
In response, Canada has committed to a “forceful but reasonable” retaliation, while Mexico has prepared a response plan, the details of which were not disclosed. China has declared its intention to “firmly defend” its interests.
Trump is also contemplating tariffs on various other products including pharmaceuticals, steel, aluminum, copper, computer chips, and related items, and has issued a stark warning to the EU over its alleged poor treatment of the US.
Trump argues that imposing these tariffs will generate substantial revenue for the federal government and compel countries, including close allies, to comply with his demands.
However, economists consistently warn that such tariffs could increase costs for countless Americans, challenging Trump’s promise to swiftly reduce living expenses amid widespread economic discontent.
On Friday, Trump acknowledged the possibility of “temporary, short-term disruption” from the tariffs but expressed hope that Americans would understand the rationale. He stated, “Tariffs don’t cause inflation; they bring success.”
The financial markets are also showing signs of concern. Following the announcement, US stock prices fell, with the Dow Jones Industrial Average dropping by 0.75% in New York.
Following his electoral victory, Trump focused on Canada, Mexico, and China, pressing them to curb illegal immigration and drug trafficking. Initially, he indicated immediate tariff imposition but later deferred this to February 1.
Both Mexico and Canada have recently reaffirmed their readiness for Trump to act on his threats.
“We have Plan A, Plan B, and Plan C for whatever the US government decides,” said Claudia Sheinbaum, the President of Mexico, indicating a readiness to retaliate if necessary.
Canadian Prime Minister Justin Trudeau cautioned of challenging times ahead if the tariffs are implemented.
Reacting to Trudeau’s statement about Canada’s planned “forceful yet measured” retaliation, Leavitt advised at the press briefing, “It would be prudent for Justin Trudeau to speak directly with President Trump before making such exaggerated comments publicly.”
Chrystia Freeland, Canada’s ex-trade negotiator and finance minister aspiring to succeed Trudeau, suggested imposing a 100% tariff on Tesla vehicles and US-produced alcoholic beverages, targeting Elon Musk directly, a prominent figure in Trump’s circle.
Trump, who proposed a universal 20% tariff on all foreign imports while campaigning for re-election, has indicated that the EU and other major markets are also targeted.
During his inauguration, Trump outlined his strategy to restructure America’s economic relationships globally, stating, “Instead of taxing our citizens to enrich other countries, we will use tariffs and taxes on foreign nations to benefit our citizens,” asserting that this would significantly boost federal revenue from abroad.
It is important to note that tariffs are levied on importers, not exporters, meaning US companies pay these duties, which are typically passed on to consumers, thereby raising concerns about potential inflationary impacts.
Unfazed, Trump has initiated a review for establishing an “external revenue service” to manage tariff collections.
The Tax Foundation reports that Trump’s administration implemented approximately $80 billion in tariffs on around $380 billion worth of goods during 2018 and 2019, marking it as one of the largest tax hikes in recent decades.
While the Biden administration maintained most of these tariffs, it also increased duties on additional Chinese products, including semiconductors and electric vehicles.
US importers and their customs brokers must comply with Customs and Border Protection regulations by filing an entry summary for all imported goods, detailing their nature, value, and origin. The Harmonized Tariff Schedule assigns specific codes to goods, which determine the applicable tariffs.
Importers are obligated to pay the duties assessed based on the value of their imported merchandise.
