Trump introduces high tariffs to Mexico, Canada and China, trade war threatens

Trump introduces high tariffs to Mexico, Canada and China, trade war threatens

The comprehensive 25%tariffs of President Donald Trump on imports from Mexico and Canada came into force on Tuesday. This extraordinary step aims to discipline the most important trading partners in the United States. However, this poses the risk of weakening the North American economy, including those of the United States, in a phase that is already shaped by considerable economic pressure

increase in tariffs to Chinese imports

Trump has also doubled the tariffs to all imports from China from 10% to 20%. In addition to existing tariffs, these new tariffs come to hundreds of billions in Chinese goods.

"While President Trump Kanada and Mexico have given enough opportunities to stop the dangerous activities of cartels and the influx of fatal drugs into our country, they have failed to treat the Situation appropriately," said a Entry into force of the tariffs.

These tariffs come into force at a time when inflation remains problematic. The current data shows that the Americans and the US economy as a whole

The tariffs could increase the prices for a variety of goods that are imported from the three countries. According to data from the trade inspectorate, these 2022 goods worth $ 1.4 trillion to the USA, which makes up over 40% of the total value of all imports.

fresh fruit and vegetables, cars and auto parts as well as electronics such as cell phones and computers are among the most important imports Mexico, Canada and China, which are now subject to between 20% and 25%.

Chinese and Canadian reactions

Beijing reacted on Tuesday by announcing 15% tariffs to poultry, wheat, corn and cotton, as can be seen from a statement by the State Council. In addition, a 10%customs came into force on “Sorghum, soybeans, pork, beef, beef, seafood, fruit, vegetables and dairy products”.

hours before the Zölle came into force, the Canadian Prime Minister Justin Trudeau said that Ottawa would immediately react to US goods worth $ 30 billion with tariffs. By March 25, according to Trudeau, Canada will raise additional tariffs over $ 125 billion on American goods.

"Canada will not accept this unjustified decision without any reason," said Trudeau in an explanation.

The economic consequences

Although Trump's earlier claims say that exporters pay the tariffs, it is actually the case that companies that receive goods from abroad pay the tariffs in advance. These companies, often trading partners, usually pass on the increased costs to consumers by raising prices. In some cases, however, they could also be forced to bear the higher costs themselves.

Despite the resilience of the American economy, tariffs come into force at a time at which cracks become increasingly clear in the economic basis. A report by the Bureau of Economic Analysis recently showed that consumer expenditure in January has dropped unexpectedly, while an inflationary report shows that consumer prices have increased again in January and that inflation continues to grow with persistent rates.

falling consumer confidence

In the meantime, consumer confidence at the beginning of 2023 has fell the strongest since 2009, and a separate report on consumer confidence has reported the greatest decline since the beginning of the records in 1978. This is problematic because consumer expenses make up more than two thirds of the economic activity in the USA.

In addition, the labor market report on Friday shows that growth continues to stagnate. Applications for unemployment benefits rose unexpectedly last week and the Trump administration has released thousands of federal employees, which could potentially disrupt local economies. The federal expenditure was also shortened, which limits access to the livelihoods and services of many people.

threats to the industry

The intensified immigration policy of Trump also threatens housing, agriculture and other key industries.

"The introduction of tariffs on Canada and Mexico endangers the cooperation to strengthen our common border and carries the risk of starting a trade war with the closest trading partners of America," said Tiffany Smith, Vice President of Global Commercial Policy in the National Foreign Trade Council.

Smith emphasized that the NFTC supports the goals of the Trump administration to "tackle illegal activities at our limits." Nevertheless, they are "deeply concerned" about the new tariffs because they "increase the costs for American companies and consumers and endanger economic growth in the United States.

outlook on future tariffs

Trump and his administration have indicated that the latest round of tariffs, although significant, is only the beginning. Customs on steel and aluminum are to come into force on March 12, while on April 2, further reciprocal tariffs that correspond to those that collect other countries on US goods are expected.

In the meantime, Trump indicates that further tariffs will follow. Last week he signed an executive arrangement for the examination of tariffs on wood. Although he has repeatedly emphasized that the United States does not need Canadian wood, this customs could increase the prices of new houses - an essential inflation factor for American families.

Trump also indicated on Monday that he would raise tariffs to agricultural imports to promote domestic sales. These tariffs should also come into force on April 2, Trump said in a contribution to Truth Social.

This article has been updated with additional information and context.